Degrees of difficulty – flexibility needed for student accommodation

University students are usually heading home for the summer now, and those returning next year or planning to start higher degrees, are keen to secure their accommodation for their next academic year. Often this is done well ahead of time to ensure that they can secure the best offering before exam results are released in August and first year students then push up demand.

In light of Covid-19, many students (and parents, who may be paying for or guaranteeing accommodation) are wondering what to do for the best. There are two new key concerns this year; will students be able to terminate a contract if lockdown hasn’t eased by September, or if there is a further outbreak next year, and what if the university moves tuition to ‘online only’, potentially reducing the need for accommodation nearby?

These questions are further complicated according to who is providing the accommodation. The legal commitment is different if student accommodation is provided directly by an educational institution compared to provision by a third party who is renting out a room or a shared house (even if it was sourced via the university).

A university providing accommodation for students will require the student to enter into a contract which is often payable on a weekly basis and has a fixed duration which tallies with the duration of the terms or the academic year. The contract will usually include a clause allowing the university to terminate if there has been gross misconduct or if the student is removed from the course for some reason. There is not usually an option for the student to terminate early and likewise very little opportunity to negotiate bespoke terms, because the same contract will be rolled out across all campuses.

That said, pre Covid-19, if a student had needed to terminate their contract early for a legitimate reason e.g. the illness or death of a parent, the university would usually look upon the situation sympathetically and a compromise could be reached.

Unusually at the outbreak of the pandemic, many universities, including Reading, immediately offered their students the option to leave university accommodation without charge as soon as lockdown was announced.

Where a student rents a room or a shared house from a third party, this will usually be pursuant to a licence or an assured shorthold lease (AST). A ‘lodger agreement’, where you occupy a room and the home owner also lives in the house, is a very flexible option. Either party are able to terminate on a week to week or month to month basis. Previously, I would have advised caution in that situation, because the student would risk having very little notice to have to find somewhere new to live; in the current climate, that may now be an advantage.

A more common AST arrangement is for a fixed term of 12 months. The landlord cannot terminate within the fixed term unless the tenant has breached the terms, but it would be common for it to be terminable by either party after the fixed period expires, upon service of notice of two months for the landlord and one month for the tenant.

If a student wants more flexibility to take account of the unpredictability of Covid-19, they could negotiate a rolling break clause i.e. so, rather than a fixed term, either party could terminate at any time upon the giving of one or two months’ notice. Seeking this level of flexibility may create the risk the student fails to secure the accommodation (with the associated risks to well-being if it’s important for them personally to live with their friends), or may require higher rental payments as landlords seek to balance the risk of being left with a vacant property.

It is also unlikely that a landlord would agree to this level of flexibility from day one because statutory powers prevent them from obtaining a possession order within the first six months of the lease, in any event (notwithstanding what it may want to negotiate). Accordingly, they are more likely to agree to a six month fixed term with mutual rolling termination provisions applying afterwards.

Moving forwards, in popular university towns, there may be very little change in the terms of the ASTs offered if demand still outstrips supply. In less popular areas, we can expect private landlords to adjust quite quickly to the change in the marketplace, as the primary driver will always be to have a tenant in situ, even if it is for a shorter fixed term.

The bigger shift will need to be with the universities themselves. As we are seeing, the way courses may be taught for the next 12 months at least is going to become more flexible. If universities are likely to move to remote teaching as a way to protect their tuition fees if another pandemic were to occur, they will need to look at an overhaul of their ‘standard’ accommodation agreements as well. If there is no scope to add student-triggered break options, as a consequence of a Covid-19 lockdown or a change to teaching patterns, the question may then become, is that contract a ‘fair’ contract or could it be open to challenge?

In all situations we may see a push from students for greater flexibility and a greater awareness of their exposure to a large rental bill, especially as it has become quite clear that Covid-19 itself is not a get out of jail card for contractual obligations.