En suite and sour

March 30, 2007

Hotel-style digs with price tags to match offer students comfort and universities income, so why isn’t everyone keen on such schemes? wonders Alison Utley

Dishwashers, leather sofas, broadband, flat-screen televisions with Sky TV packages. Students arriving on campus today stand a good chance of being treated to digs more akin to rooms offered by an international hotel chain than the fag-strewn living quarters and mouldy bathrooms that greeted previous generations of undergraduates.

And student hospitality, as it is now known, is big business. Major construction chains are permanent features on many campuses, and complicated buyback or leaseback arrangements with banks — regarded a few years ago as high-risk strategies — are increasingly common.

Universities are starting to make their valuable property portfolios work for them. Very often bed spaces on campus are no longer owned by the institutions that house them. And, universities argue, releasing the money involved gives them more to spend on developing their estates. But is this in the interests of students or are prices, already on the up, set to rocket further, as the National Union of Students fears?

The NUS says that average university and private-sector hall rents are now 83 per cent of the weekly student loan budget. "With increasing rents under privatisation, fewer people from poor families can afford to go to university — in direct conflict with the Government’s objective of improving access to higher education," it says. The focus on profit has also led to worries about loss of social, pastoral and democratic structures within residences.

But universities argue that deals with the private sector enable them to build better facilities that can only benefit students. A refinancing deal at Lincoln University, for example, recently released £30 million. It took the university some 18 months to negotiate the deal to unlock the money. Part of the cash has been used to finance a development programme over the next five years at the university’s main Brayford Pool campus.

Such deals are complex. Other efforts to follow this route have stalled, according to Ben Ball, manager of residential services at Lincoln. "The links between the university and the housing provider need to be very carefully worked out so that both parties’ interests are looked after," he says. "We are confident we got that right, and it is key to making sure students get the best possible service while keeping costs under control."

Students living in the village and staff working for the residences will be largely unaware of the changes, says Stephen Avery, director of finance and resources at Lincoln. "The deal is an extremely good one for the university in that it secures the maintenance of the halls of residence and maintains a shared interest by the university in the charitable vehicle, while unlocking finance essential to realise the full potential of this university."

The university’s Brayford Student Village was transferred to a new charitable company called Lincoln Student Solutions Limited (LSL). The company is jointly owned by the university, Sanctuary Housing Association and the Bank of Scotland.

The contract is expected to run for 35 years. In return for transferring the residences to LSL, the university will forgo the rents for the premises but will receive an upfront premium of £30 million. At the end of the period, the residences will return to the university.

Ball says the funds will be used to reduce Lincoln’s exposure to loans, enabling it to commit to new building projects such as a student centre being created in a former railway engine shed. An added bonus, he says, would be a £1 million environmental improvement scheme.

But Manchester University remains to be convinced by leaseback schemes. It says it has the largest number of places in university-owned accommodation in the UK, with more than 9,000 in halls of residence. Helen McGlasham, head of the accommodation office, says that although some halls were leased from the private sector, all were managed by the university .

"We feel this is the only way we can continue to provide students with a first-class service," she says.

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