Watch this space: potential amendments to planning legislation in respect of lease duration for Purpose-Built Student Accommodation (PBSA)

Some providers of PBSA have begun to offer students 51-week tenancies only rather than leases for a term of 41 weeks in respect of the academic year which were widely offered to students previously. Providers of PBSA have quoted market trends and increased requests for longer leases as the reasons for offering these 51-week tenancies to students. 

The Irish government has responded, with Minister for Housing Darragh O'Brien and former Minister for Higher Education and now Taoiseach Simon Harris spearheading the initiative. Plans to legislate were approved by Cabinet ahead of Mr Harris' accession to Taoiseach with legislative changes to the Residential Tenancies Act expected before the summer recess.[1] It is anticipated that the new legislation will ensure that student accommodation leases next year are confined to the academic year. These proposals will likely amend planning laws in Ireland so that when planning permission for student accommodation is granted, it will be a condition of the planning that the maximum lease period is confined to the relevant academic year. We would expect that the legislation should allow scope for the student to extend the term should they wish to do so.[2]

The current state of play 

Providers of PBSA are usually granted planning permission for PBSA on the grounds that the 'use' would be for student accommodation, which is distinct from residential and tourist accommodation.  Student accommodation is defined in Section 13 (d) of the Planning and Development (Housing) and Residential Tenancies Act 2016 as:   

“(a) … a building or part thereof used or to be used to accommodate students whether or not provided by a relevant provider (within the meaning of Qualifications and Quality Assurance (Education and Training) Act 2012), and that is not for use— (i) as a permanent residential accommodation, or (ii) subject to paragraph (b), as a hotel, hostel, apart-hotel or similar type accommodation, and (b) includ(ing) residential accommodation that is used as tourist or visitor accommodation but only if it is so used outside of academic term times;”. 

This is not the first time in recent years that the PBSA sector has been specifically regulated. Most recently, the Residential Tenancies (Amendment) Act 2019 brought leases and licences granted to students of residential student accommodation during the academic term within the scope of the Residential Tenancies Acts and the purview of the Residential Tenancies Board. 

Further regulation 

The government's recent proposal and response to this issue highlights the importance of improving the private rental sector in Ireland, which the government has committed to doing as part of Rebuilding Ireland, the government's action plan on housing and homelessness. We need to ensure that affordable accommodation in the student sector (along with other areas such as affordable housing for the elderly and those with additional needs) is factored into the broader housing plan, and we have seen some government funding for some on-campus projects in the last year in this regard. 

Given the wide range of sectors the private rental sector covers, regulating this was never going to be an easy feat, particularly around PBSA, which has seen strong demand due to an increase in student numbers. The sector is attractive to investors as the pipeline for further growth in student numbers is strong, which combined with the severe shortage of PBSA in relation to the actual student numbers means that this is currently an attractive and high-performing asset class. However, new developments face challenges: rising building and operational costs, the application of rent caps by extending the rules regarding rent pressure zones to student accommodation, and delays and uncertainty regarding the planning process. A delicate balance is required here, as the sector needs to expand and remain attractive to independent capital and funding for further development.

We look forward to seeing what is proposed here.

[1] New law set to limit student accommodation leases to academic year, Ian Curran, The Irish Times, 8 April 2024

[2] Simon Harris speaking on RTÉ Radio One's Morning Ireland