The UK’s largest student accommodation provider paid three executives more than £1 million each last year, prompting critics to claim that “huge salaries” in the growing market are “being funded by public money and student debt”.
With student numbers growing fast in recent years and universities reluctant or unable to build their own halls, the for-profit student accommodation industry is an ever larger presence in UK higher education.
And, with an increase in student maintenance funding in England one potential outcome of the government’s ongoing review of post-18 education, the industry may have a larger pool of potential income in the future.
Richard Smith, chief executive of Unite Students, received a total remuneration package of £1.4 million in 2017, according to its annual report, including £437,167 in salary, an annual bonus of £401,407, pension benefit of £84,506 and £476,619 via a long-term incentive plan. Joe Lister, chief financial officer, picked up a total remuneration package of £1.3 million, and there was £1.2 million for former property director Richard Simpson.
Unite is the UK’s biggest provider of purpose-built student accommodation in terms of volume, with 36,385 beds nationwide.
Goldman Sachs and the Wellcome Trust are majority shareholders in iQ Student Accommodation, which describes itself as “the largest accommodation provider in the UK by value”. Companies House documents show that total remuneration “in respect of qualifying services” for the highest-paid director at IQSA Services Ltd – which a spokeswoman said is “part of the iQ Student Accommodation group” – was £1,058,000 in 2016-17.
Another major provider, UPP, saw its highest-paid director pick up a total remuneration package of £553,000, including pension payments and benefits. Total remuneration for all directors stood at £4.7 million, although it is understood that this includes inter-company payments to reflect the time that directors spend on subsidiary boards, according to its 2016-17 annual report.
A survey of student accommodation costs by the National Union of Students and non-profit provider Unipol found that, in 2015-16, the average weekly rent for purpose-built student accommodation (across universities and private providers) was £146.73 – up 18.4 per cent since 2012-13.
The survey report said that while in 2006, 82 per cent of the student accommodation sector was operated by institutions, that had shrunk to 59 per cent by 2015-16 and it predicted that, if trends continued, the private sector would “be the majority supplier” by this year.
Many domestic students rely on government-backed student maintenance funding to pay their rent – although that is not the case for international students.
Sally Hunt, general secretary of the University and College Union, said: “These huge salaries are being funded by public money and student debt.”
She added that the government’s review of student finance “needs to look at the best way to support students while they are at university, but they need that money to help them study, not to fund further rent hikes”.
Eva Crossan-Jory, NUS vice-president for welfare, said that while “there are accommodation executives earning greater salaries than ever before…students are struggling to meet the rising costs of their accommodation. If there was ever a case of redistributing wealth the wrong way, then this is it.”
She said that there would “now be a legitimate fear that, if the ongoing Augar review recommends a much-needed increase in the size of the maintenance support package, then it will simply find its way into the accounts of these providers. The only solution then remains a shift away from reliance on private providers across the sector – so that any surplus generated is invested back into students, rather than the pockets of executives.”
A Unite spokesman said that “like any public company, Unite’s executive remuneration is determined by an independent committee and approved by shareholders”, as well as being “measured against comparable companies and…linked to the generation of long-term value for all stakeholders, namely shareholders, students and university partners”.
He added: “Our customers are students and universities who need accommodation and have a choice of options. They choose Unite because, as our student and university satisfaction surveys show, they recognise that we offer a high-quality living environment that provides real value.”
A spokeswoman for iQ said: “Executive pay is set by the remuneration committee and draws on external benchmarking done against the industry and comparable sectors.” The firm has “extremely high occupancy rates...demonstrating the appeal we have and the value we give to our higher education partners and the students who choose to stay with us”, she added.
A UPP spokeswoman said that its remuneration packages “are performance-based” and “regularly benchmarked”, designed to attract “the best talent” in terms of individuals “who are fully focused on providing the best deals for our partner universities and a great residential experience for students”.