In recent years, the UK’s student housing and build-to-rent sectors have been held in high regard with institutional investors- offering stable yields, demographic resilience and often boasting strong ESG credentials. However, the incumbent governments push to empower the tenant in the Renters Reform Bill 2025 has created a wave of uncertainty which at its crest could lead to hesitation or even recalibration.  

Fixed-term tenancies and section 21: A new era of uncertainty 

One of the leading disruptors in the bill is the abolition of fixed-term tenancies. Historically, these have been aligned with students’ academic schedules, allowing landlords peace of mind when it comes to occupancy. Now, tenants may choose to vacate a lease halfway through, which could lead to an influx of supply in a time when demand is scarce.  

Exacerbating this issue, section 21 ‘no-fault’ evictions have been abolished, meaning landlords can no longer evict tenants at the end of a fixed-term tenancy without providing a specific legal reason. This means landlords must now rely on the reformed section 8 grounds for possession, which requires careful and extensive documentation. 

H2 investor confidence wavers amid reform risks

These reforms are designed to provide tenants with a greater sense of security over their living choices, however, it may prove to have the opposite effect in the medium term as landlords choose to exit the market to pursue a more stable asset class. Cushman & Wakefield have estimated that the income volatility these reforms may cause could lead to higher operational costs, due to increased turnover. 

 The situation in Scotland may serve as a cautionary tale to investors with the housing (Scotland) bill which was introduced on 25 March 2024. Designed with the similar premise in mind of pushing power into the hands of the tenants, the bill, if passed, will lead to the creation of designated Rent Control Areas (RCAs). The City of Edinburgh Council has publicly stated its support of rent controls and will likely become a rent control area if the bill does pass. 

Looking further afield, Amsterdam introduced the Affordable Rent Act in July 2024, a form of rent control that is determined by a point-based system connected to the value of a property.  Properties are awarded points for size, official value, amenities, luxuriousness, energy efficiency and outdoor space. It was implemented with the same goals as the Scottish and English bill, to place more power into the hands of the tenants. 

However, many private landlords have already begun to sell, or in some cases invest to upgrade their properties into the unregulated ‘luxury’ segment. This has caused a decline in available rental units, especially in the private sector. 

The bill in Scotland is currently in Stage 3, which will decide whether it’ll become an Act or fail. The inclusion of PBSA within the parameters of the bill- meaning PBSA will become rent controlled, is generating considerable controversy surrounding the bill. This has been opposed strongly sector wide; however, it remains to be seen whether the bill will be altered to remove PBSA’s inclusion. 

Market impact: Early signs of strain 

Yet the effects of the proposed bill have already caused shockwaves in the Scottish BTR market. Back in April of this year, analysis from the Scottish Property Federation (SPF) and Savills showed a hefty decline in Scottish Build to Rent construction activity. From the 12 months since the introduction of the bill, construction activity for BTR fell by 26%. In addition to this, Scotland recorded zero growth in the number of new BTR schemes being submitted for planning, versus a growth of 6% in England. 

England’s position: Reform without rent control  

While rent control has not yet been proposed in England, it is clear that residential real estate is not immune from policy volatility. Despite vocal intent to unlock institutional capital from the government for housing, the effects of proposed legislation have already caused uncertainty, compounded by roadblocks in development such as Gateway 2.   

Whether these wrinkles iron out in time or not, it has caused one of the most in demand sectors an identity crisis which will almost certainly give investors a headache to navigate going forward. Given the results of CBRE’s Lender Intentions Survey 2025, in which lenders stated that they are becoming more cautious regarding regulatory and sustainability related risks, effective navigation will be key to ensuring that clients remain lender-compliant in a tightening market.