Purpose-Built Student Accommodation - ending student tenancies: consultation

Introduction and Background

For the purposes of this consultation document, the term “Purpose-Built Student Accommodation” (PBSA) is used to refer to properties which are let predominantly to students, usually by universities, colleges or companies who own or manage accommodation specifically for students. The term “PBSA” is used to differentiate this type of tenancy from a Private Residential Tenancy (PRT). Although many students reside in PRT properties, they are not predominantly available for students and the nature of those tenancies differs in some key aspects from a PBSA tenancy. The Private Housing (Tenancies) Scotland Act 2016 sets out which student tenancies cannot be PRTs in paragraph 5 of schedule 1 of the Private Housing (Tenancies) Scotland Act 2016^[1]). The list of types of properties in paragraph 5 of schedule 1 are all included in references to PBSA in this document.

The 2016 Act introduced significant reforms to the housing sector in Scotland, replacing assured and short assured tenancies with private residential tenancies (PRTs). PRTs are open-ended and continue until the tenant decides to leave or the landlord evicts the tenant, based on one of the grounds for eviction specified in the 2016 Act. No-fault evictions are not permitted.

Purpose Built Student Accommodation (PBSA) tenancies are not subject to the legislation applicable to PRTs. PBSA tenancies have fixed start and end dates, aligned to the academic year, and students are required to leave their accommodation at the end of the tenancy period. Student tenants are currently required to pay rental costs for the entire tenancy period, even if they move out of the property.

In its Programme for Government 2021/22 “A Fairer, Greener Scotland^[2]”, the Scottish Government committed to undertaking a review of purpose-built student accommodation (PBSA), making recommendations on regulation, affordability and the role of local authorities.

A group to oversee the review - the PBSA Review Group – was set up and the UK Collaborative Centre for Housing Evidence (CaCHE) was contracted to carry out research on PBSA and student housing in Scotland. This research, which comprised questionnaires completed by students along with individual interviews with students and those involved in the provision and management of PBSA, identified a number of areas for consideration by the PBSA Review Group. In particular the CaCHE report^[3] , published in December 2022, noted that the extension of tenants’ rights and notice periods in the PRS presented a challenge to the PBSA business model, given the ongoing rented housing reform and support for students to enjoy the same rights as other private tenants, including PRS renting students.

The CaCHE report also identified notice periods as a key issue. There were strong demands for a 28 days’ notice period from PBSA student tenants participating in the research, in line with what is available in the PRS. In contrast, PBSA providers and universities noted that PBSA tenancies tend to operate on 39 to 44 week contracts with rental costs calculated on projected occupancy rates. The restrictions that require PBSA to be let only to students reduce the freedoms to let more flexibly. There were arguments made from providers that this could risk rent increases to address the risk of voids.

Following consideration of the CaCHE report, the PBSA Review Group formulated 11 recommendations, one of which was:

Recommendation 2: that Scottish Government consults widely on the scope to legislate on PBSA regulation, specifically in respect of notice periods and cooling off period for PBSA tenants, including identifying what circumstances should apply in such cases and potential impact on investment and rent levels.

Surveys designed to elicit information on both the need by students to terminate their tenancy and the potential impact of this on investors and providers; and on circumstances in which tenancies could be ended was carried out in 2025. Scottish Government analysis of the survey responses^[4] received from students, Scottish Property Federation and investors in and developers and providers of PBSA was inconclusive. Students and providers had differing views regarding notice periods with many students in favour of changing the current notice period regime but with no consensus on what this change should be. The vast majority of providers were opposed to any change to notice periods, noting that such changes could impact directly on providers through increased costs and indirectly on students through increased rents. The findings of the surveys had several limitations so are subject to considerable uncertainty, in particular the small number of responses meaning that the findings cannot be assumed to be representative.