Renters' Rights Act 2025 – practical implications for Purpose-Built Student Accommodation (PBSA) investors

The Renters' Rights Act 2025 (the Act) received Royal Assent on 27 October 2025 and will materially reshape the private rented sector. 

For PBSA investors, the key point is not simply that assured shorthold tenancies (ASTs) will be abolished and replaced by assured periodic tenancies (APTs) from 1 May 2026, but that access to the PBSA exemption depends on membership of, and compliance with, a government-approved code, such as the ANUK/Unipol Code of Standards for Larger Developments for student accommodation, dated 27 February 2026 (the Code). If this becomes the route by which operators preserve fixed-term lettings aligned with the academic year, Code compliance may move from sector best practice to something closer to a core operating requirement, with consequences for possession strategy, financing, valuation and operator selection.

Why the PBSA exemption matters

Under the Act, any term in an assured tenancy that tries to create a fixed term will have no legal effect. A landlord can no longer manage occupation by relying on a contractual end date and must instead look to the possession routes set by statute and the court process. 

The PBSA exemption allows qualifying PBSA providers that are signed up to the Code to grant fixed-term common law tenancies aligned with the academic year. This gives investors greater control over vacant possession at the end of the academic year and preserves the ability to take multiple rent payments upfront, which remains important for PBSA schemes housing international students without UK guarantors.

For investors, this makes Code membership and compliance a diligence and underwriting issue, not merely a matter of sector best practice. A purchaser or lender may increasingly want evidence of Code registration, compliance systems, operator capability and records showing that tenancies have been structured and managed to preserve the exemption. Code compliance could therefore become a more prominent feature of financing, valuation and operator selection, although the precise treatment is likely to vary by asset, lender and transaction context.

Transitional risk ahead of the 2026/27 academic year

The Act includes transitional provisions enabling qualifying PBSA landlords to recover possession of existing tenancies using a modified version of Ground 4A, the student accommodation ground under Schedule 2 of the Housing Act 1988. A tenancy will be a "qualifying student tenancy" for this purpose where the landlord, or a person appointed to act on the landlord's behalf, is a member of the newly approved Code. To rely on modified Ground 4A, a landlord must:

• satisfy the student test (meaning the tenant was, or is, a full-time student at the relevant time, or the landlord reasonably believed the tenant would become one during the tenancy); and

• serve two documents on the tenants by 31 May 2026:

  • first, a prescribed written information sheet required for existing tenants under the Act; and 

  • second, a written statement (which is not in prescribed form) setting out the landlord's wish to recover possession using Ground 4A.   

The transitional period creates a time-sensitive implementation risk. PBSA investors should confirm Code membership, audit tenancy records against the student test and ensure tenant notices are prepared and served within the required period. In a transaction context, buyers and funders may wish to test these points through enquiries raised with the operator, conditions to completion and warranties or reporting obligations on management arrangements.

Implications for financing, valuation and underwriting

Even where the move to APTs is only relevant for the transitional period, it may reduce income predictability. Tenants will be able to give two months’ notice to end an APT and leave during the academic year, potentially creating void risk that is difficult to mitigate once teaching terms are underway. Valuers, lenders and investment committees may therefore scrutinise assumptions around occupancy, re-letting, rent collection, notice strategy and the timing and cost of obtaining vacant possession.

These issues should not be overstated - investor appetite for PBSA remains strong, and the exemption is designed to support the academic-year letting model once investors and operators are familiar with the new regime. The practical point is that legal compliance, operator performance and documentary evidence may carry greater weight in due diligence, when drafting management agreements and during financing discussions, than they have in previous transactions.

How regulatory change may favour scaled, well-capitalised operators

The Act also makes changes to House in Multiple Occupation (HMO) licensing and wider local authority enforcement powers that PBSA investors should monitor. PBSA schemes with shared facilities may, depending on their configuration, occupation and local licensing designations, fall within parts of the HMO or additional licensing framework. The position will remain asset-specific and should be confirmed through diligence rather than assumed across the sector.

Where licensing is relevant, the investor concern is less the existence of the regime itself and more whether the operator has the systems to identify requirements, maintain licences, comply with conditions and report issues promptly. Management agreements may need clearer obligations around licensing calendars, regulatory monitoring, information sharing and responsibility for losses caused by compliance failures.

Future regulatory changes could create some uncertainty, particularly if requirements designed for traditional HMOs are applied to PBSA assets without sufficient adaptation. That risk is best addressed through proportionate monitoring and contractual controls, rather than treating licensing change as a fundamental challenge to the PBSA model.

Over time, this may favour scaled, well-capitalised operators with established compliance infrastructure, property-level data, audit trails and the ability to respond to regulatory change across a portfolio. For investors, operator selection and oversight may therefore become an even more important part of protecting their investment. 

Conclusion

The Act does not make operational discipline new to PBSA. The sector is already operationally intensive and professionally managed. It does, however, increase the significance of operating platform strength, Code compliance and regulatory responsiveness as drivers of performance, risk allocation and value. Across operational living, the broader message is that performance is increasingly linked to the strength of the operating platform, the quality of compliance systems, and the ability to manage regulatory change at scale.