Purpose-Built Student Accommodation (PBSA) - notice period survey: responses summary

3. Provider Survey: Summary of Results

This section will describe the findings of a provider survey hosted on Citizen Space between 10 July 2024 and 31 October 2024.

1.

• Thirty five respondents answered the provider survey.
• Not all respondents answered all questions. There were a variable number of responses per question and part-question (with some questions having multiple parts).
• The number of responses per question (and part-question) ranged from 3 to 35.
• A mixture of open and closed questions were used, including MCQs with variable lists, and opportunities for qualitative feedback through open-text answers.

Question 1: Are you responding for: [type of PBSA]

• Approximately 59% of respondents indicated that they were answering for “Privately owned PBSA”, with the remainder answering “University/college halls of residence”.
• Ten different Scottish universities were represented.
• One respondent was participating on behalf of a Scottish FE institution.
• Private providers varied widely in profile and scale, where this information was provided.

Question 2: Do your tenancy agreements provide for students to leave before they end?

• The vast majority (88%) of respondents indicated that tenancy agreements did make provision for students to leave before the tenancy end (“Yes, for specific reasons”).
• 9% answered “No”.
• Only one provider indicated that students did not need to provide a reason to end a tenancy early (“Yes, no reasons required”).

Question 3(a): If you answered "yes, for specific reasons", for what reasons can students leave the tenancy agreement early?

• The percentage findings for question 3(a) are not cumulative, as respondents could choose multiple answers.
• The most popular reason indicated for a student ending a tenancy agreement early was “Leaving university / college before course completion”, with 77% of respondents choosing this option.
• Other popular reasons selected from the MCQ format included:
  • Left university / college after completing course (29%).
  • Moving to another university / college (42%).
  • Illness (71%).
  • Family bereavement (55%).
• No respondents indicated that the intention of the student tenant to move to other accommodation was an agreed reason for leaving a tenancy early.
• Many providers included further detail and examples in free text answers to question 3(a). Prominent themes included the consideration of exceptional issues on a case by case basis, and the need for evidence of a claim. Examples cited of exceptional issues overlapped to some extent with the MCQ options provided in question 3(a) e.g. leaving university, medical issues, bereavement, deferral of studies, quality of accommodation, and visa issues.

Question 3(b): If you answered "yes, for specific reasons" or "yes, no reasons required", is there a required notice period?

• 50% of respondents answering question 3(b) said “no”, with the remainder answering one of the versions of “yes”.
• Free text answers to question 3(b) varied widely, though the most common theme emerging was that providers would consider applications to end a tenancy early in exceptional circumstances, on a case by case basis.
• In the small number of free text answers provided, providers gave different accounts of whether they provided a required notice period or not. For example:
  • One provider stated that there was “no specific notice period”, and residents would not be held to a notice period as applications to leave would be driven by individual circumstances.
  • On the other hand, one provider said “We ask for 28 days notice.” Another provider stated that a notice period “varies from 0-28 days for those released due to extenuating circumstances, such as illness and bereavement.”

Question 4: If rental payments are made up front, are students refunded rent/accommodation costs?

• About 74% of respondents indicated that if rental payments are made up front, students are refunded rent/accommodation costs.
• All other respondents answering question 4 indicated either “partially” or “no”.
• There was no option for free text answers to question 4, though free text answers to question 6 covered similar ground.

Question 5: If students are fully or partially refunded, how are these refunds made?

• About 70% of respondents said that these refunds happen “automatically”, with the minority indicating that refunds were “on request” (30%).
• Some providers gave more detail in response to question 6.

Question 6: How much is typically refunded and how many months does this equate to?

• Qualitative responses indicate that several factors are taken into consideration on the amount refunded, such as whether a student has overpaid, how long the student was in residence, and the length of the remaining period of the contract after the notice period.
• One respondent noted that many PBSA providers already allow for cancellation rights prior to arrival and early termination on a discretionary basis, backed by the ANUK or Unipol Codes^[1]. According to this respondent, these Codes may purportedly mitigate need for a mandatory notice period.
• A prominent theme emerging in question 6 was that the amount refunded varies widely, with individual circumstances being considered on a case by case basis. For example, one respondent stated that:

“The amount refunded depends on the amount that has been over paid…Our contracts can have different durations and different rates…the amount any student gets refunded when leaving their tenancy early depends on their individual circumstances, the date they move out and the nightly rate being refunded.”

Question 7: If legislation was to be introduced creating a requirement for notice periods, under what circumstances do you think they should apply?

• The percentage figures for question 7 are not cumulative, as respondents could choose multiple answers (or none) from a MCQ list.
• Approximately 76% of providers indicated that, if legislation was to be introduced creating a requirement for notice periods, the circumstances under which these should apply would include “Leaving university / college before course completion.” Other popular options selected from the MCQ list included:
  • Moving to another university / college (45%).
  • Family bereavement (45%).
  • Illness (58%).
• Qualitative answers to question 7 highlighted a range of possible situations, including issues related to mental health, dispute resolution, visa issues, or severe financial hardship.
• Many providers were opposed to introducing a requirements for notice periods under any circumstances. For example, some answers pointed to the ANUK & Unipol Code of practice, including dispute resolution. The risk of unintended consequences was highlighted, such as possible negative impacts on both PBSA providers (e.g. higher costs) and students (e.g. higher rent).
• A few respondents pointed out that deferral of studies, a student leaving their studies altogether, or a student no longer being registered at their HE institution, might be valid circumstances where notice periods might apply. For example one respondent stated that:

“...there should be legislation that states the student can give 28 days notice to end their tenancy if they are no longer a student at the university. Some private providers (and possibly universities) state that you have to be a student to live in their accommodation but do not allow contracts to be terminated if the student is no longer a student creating a paradox where they are not permitted to be in their accommodation but they are not permitted to end their contract and have to pay rent for accommodation they cannot live in.”

Question 8(a): Annually, how many requests to terminate tenancy agreements do you receive from tenants?

• Responses suggest a wide range of variation in numbers of requests to terminate tenancy agreements, from a small quantity (e.g. “only a handful”) to several hundreds.
• These figures are subject to considerable uncertainty, with respondents using various different scales of measurement (e.g. per property, or per year). This can be taken as a limitation of the survey script.
• Some providers did not have precise figures available for requests to end tenancies. For example, one provider stated that “The University does not currently record when students request to be released from their contract.”

Question 8(b): What percentage of beds you manage in total does this equate to?

• While many respondents did cite specific percentages, it is often not clear what scale of measurement is being used e.g. whether these percentages are intended per property or per year, or some other measure.
• Given these difficulties, it is not possible to interpret the reported figures in a consistent way. Taking account of these limitations, the percentage figures cited by respondents ranged from 0.3% to 42%.
• Some providers pointed out that these figures can vary considerably both within and between academic years – and that this variation might be exacerbated by notice periods. For example one respondent described how:

“Bed numbers can change annually due to additional contracts with the private sector…If students were given the right to terminate on request, we believe this figure could increase significantly. We also anticipate the right to terminate on request would mean students would likely wish to terminate as soon as their exams end, or even terminating before holidays such as Christmas break then looking to start a further contract on return from vacation breaks.”

Question 9: Annually, what percentage of requests do you agree to?

• The findings of question 9 are subject to similar limitations to questions 8(a) and 8(b).
• Allowing for these limitations, a wide range of variation was observed in text answers, with cited figures ranging from “sub 1%” up to “100%”.
• Some respondents responded at greater length to elucidate on the complications of this area, indicating that many requests are approved, at the discretion of the provider. For example, one provider stated that:

“It depends highly on the reasons for these requests and if these are valid or not. We also allow students to terminate their tenancy early if they find a replacement tenant to take over their tenancy agreement, regardless of their circumstances. As such the approval of some of the requests completely relies on the students ability to find a replacement tenant, and demand for accommodation at the time. We agree to all requests with valid reasons. From last years requests we approved 6 out of 9 which would mean around 66% of requests were approved.”

Question 10: Annually, how many empty rooms/beds (voids) do you have on average as a direct result of students leaving their accommodation early?

• Responses varied widely, with some respondents answering in different units e.g. in percentages, or in number of beds, which makes direct comparisons problematic.
• While some respondents indicated that they did not have data available, others were able to supply more detailed figures. For example one respondent cited “80 beds unoccupied at a cost of over £500,000.” Other figures cited ranged from “0” (zero) to “around 100”.

Question 11: On average, how long does it take to relet empty accommodation?

• While some respondents were able to specify an average time to relet accommodation after the ending of a tenancy (e.g. “on average it takes about a month”), others did not have this information available.
• Several respondents emphasised that reletting empty accommodation varies greatly depending on when in the academic year the room is vacated. For example, rooms vacated from February onwards may be highly unlikely to be re-let.
• Beyond the start of the academic year, identifying replacement tenants and occupying empty rooms is often not straightforward. For example, one respondent stated that:

“Rarely are replacement tenants found due to the demand for student housing being focused at the start of the academic year (September). Beyond this time, tenants have made their own arrangements … we have been unable to back fill resulting in a large cost to the Institution.”

Question 12: What is the current financial impact of empty accommodation, unlet due to early tenancy agreement termination, on your business?

• Many respondents provided specific figures, which spanned across a wide range of variation, from the tens of thousands to the millions of pounds.
• Others indicated that understanding financial impact may be subject to limited data, the details of different PBSA arrangements, and other complications. For example, one respondent stated that:

“Currently we have just had a new student intake for the 24/25 academic year and haven't had enough time pass and have not had any early departure requests at this time, so there is no current financial impact on our business…It is important to note that as our students pay different rents depending on their residence and length of stay each departure can have a different level of financial impact on us.”

Question 13: What do you consider the financial impact of empty accommodation would be if students are given the right to end tenancy agreements early?

• Respondents identified a wide range of possible risks that providers might face.
• While individual respondents focussed on different specific causes or risks of impact, the overwhelming consensus was that the financial impact for providers and/or students would be negative or “very detrimental”.
• For example, one respondent argued that if students could end their tenancy agreement early for any reason, this would increase vacancy periods where operators may struggle to re-let the room mid-term. It was maintained that most rooms that become vacant beyond the first few months of the academic year could not be relet. The resulting potential for large amounts of mid-semester vacancies substantially increases the financial risk for PBSA operators, as voids would mean a reduction in rental income, with no equivalent reduction in operating costs. According to this respondent, another possible scenario was that there could be higher turnaround management costs, a reduction in cash flow predictability, and vacant rooms becoming liable for council tax.
• Respondents argued there may be a risk that PBSA investors and providers might withdraw from the market, and that proposed changes may lead to rent increases as providers try to mitigate increased costs.
• One provider was in favour of change, even if this involved risk of exacerbating pressures. In response to Q13, this respondent stated that “as an organisation, we would be willing to face the additional impact, and would be in favour of the statutory right extending to all students.”
• Several providers also pointed out that, while any change to notice periods would be subject to uncertainty, negative impacts seem likely e.g. the financial sustainability of PBSA providers could be compromised. Any negative impacts on providers could affect students directly or indirectly e.g. higher rents.

Question 14: Please provide any additional information you think would be useful in relation to notice periods.

• Many respondents provided lengthy text responses highlighting a range of concerns including e.g. unintended consequences, competition with the private sector, and long term planning.
• Providers argued that if notice periods were changed, this would likely result in:
  • decreased investment in the PBSA market;
  • decrease in quality standards and maintenance of accommodation;
  • increased rent and costs for students.
• Several respondents strongly opposed any change to notice periods, arguing that current arrangements (such as the ANUK/Unipol Codes) already provide many of the benefits for students that are allegedly being sought. For example, one respondent stated that:

“We believe the negative impacts of a mandatory notice period on the stability of the PBSA letting market outweigh the benefits. PBSA … is well regulated by the ANUK/Unipol Codes, and which already offers students flexible cancellation rights before the start of their tenancy, with forbearance shown to those genuinely in need of a tenancy release during the year due to a change in circumstances.”

• Most respondents were in favour of some or other version of the status quo i.e. the consensus was an opposition to any change to notice periods. For example one respondent noted that universities are increasingly looking to the private sector to address demand for student housing, which exceeds supply.
• Most providers recommended to retain the current tenancy regime for PBSA (without a 28-day notice to leave entitlement) to avoid unintended consequences for the broader private rented sector (PRS), and to prevent further exacerbation of wider housing pressures.
• Many were of the view that lease terminations should be for “exceptional circumstances” only.
• Some providers described local ways of working which might be considered for wider adoption or good practice. For example in response to question 14, one respondent described their use of multi-annual contracts, with the end of the tenancy set to the members' current estimated graduation date.
• Many providers were of the view that changes to notice periods would likely risk reduced investment in the PBSA market, a fall in quality of accommodation. Respondents argued that changes to notice periods could prompt providers to mitigate void risks and overhead costs, which may lead to increased rent and costs for students.