Student rents soar

April 4, 1997

Change in HEFCE rules will hit university access

STUDENTS are facing rent rises of up to 40 per cent as universities give up bending funding council rules in their struggle to pay for repairs to halls. Some say the increases amount to a new entrance fee which is bound to have an impact on access.

A Pounds 28 million backlog of maintenance at Birmingham University is to push up rents by between 15 and 30 per cent over the next two years, while Keele is discussing a phased programme of increases over the next seven years of more than 40 per cent.

Manchester University has been subsidising student rents through money diverted from its recurrent grant, against rules laid down by the Higher Education Funding Council for England. The rules insist that only student rents or conference income can pay for accommodation unless there are exceptional circumstances.

Initial figures suggest that complying with these regulations could push up rents by between 12 and 20 per cent over the next three years. Self-catering rooms at Manchester University now cost between Pounds 30 and Pounds 70 per week.

A spokesman for the university said: "We need to work out a policy whereby the subsidy we have been providing from teaching and research funds is transferred over to the residence funds. It has led to a lot of discussions within the university about its accounting procedures."

A HEFCE spokesman said the council had recently clarified its position on student residences in a financial memorandum. This states that the council expects the full cost of providing student accommodation "to be recovered unless the institution considers it appropriate to do otherwise having regard to the circumstances of the particular case".

At 30 institutions, problems paying for student accommodation have been made worse by recent closure of a tax loophole involving lease and lease-back arrangements. Under these type of leases, banks or other lenders buy the buildings, which the universities then rent back, but with all the advantages of ownership.

Changes to taxation of the schemes are likely to cost the universities involved Pounds 10 million each per year.

The Committee of Vice Chancellors and Principals has called it "a devastating blow to universities already squeezed by the very tight recent budget settlements."

Paul Rigg, director of finance at Keele University, said some rises were necessary to meet student demands for better facilities.

A spokesman for Birmingham University, where annual rents for a self-catering room will rise from Pounds 1,300 to Pounds 1,849 by 1998/99, said the rises were to cover repairs to neglected buildings.

But Hannah Dee, a Birmingham student who has organised protests against the planned rises, said: "Some students just won't be able to afford these costs. It will be like introducing an entrance fee for new students."

A National Union of Students' survey of accommodation costs in 1995/96 in 70 higher and further institutions shows dramatic contrasts in the price of living in halls at different universities - from Pounds 69 per week at City University in London to under Pounds per week at St Andrews.

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