King's College, Cambridge

Rent for Undergraduate Student Accommodation

Purpose of this Paper

  1. This paper is intended to develop a way forward, recognising both the financial issues and those of access. The aim is to provide both a long term viable framework for the College and to address the short term need to settle rents for 2000/01 in time for room choices to be made and in advance of good financial information becoming available.
  2. This paper is concerned principally with undergraduate accommodation. A further paper will address graduate accommodation and the difficult issues of rent differentials between College rooms those rented externally in town.

Objectives

  1. It is proposed that student rentals should be set in the following framework:
    1. King’s desires that the whole of Cambridge remains no more expensive for students than universities of comparable standing.
    2. King’s will set charges and provide financial assistance so that a well-informed prospective applicant capable of meeting admission standards should feel welcome and as able financially to afford to attend King’s as leading competitor universities.[1]
    3. King’s should break even in the long run on its student accommodation. In calculating this, the cost of funds appropriated from endowment will be taken into account but no return will be expected on the investment in historic buildings. Account will be taken of maintenance and renewal costs of all buildings and amortisation of modern buildings.
    4. If it is clear that there is an access issue arising from having rents that cover cost, the College will make arrangements to address the problem.
    5. Applicants to King’s should be given a reasonable indication of the anticipated level of rents and other charges for the three years they are likely to be in residence, and only in exceptional circumstances should these be materially changed. Accordingly rents and other charges should be set on an indicative basis several years in advance.
    6. Relative charges for different rooms should feel fair.
  2. It should be noted that the above list does not include an objective that rents at King’s should be among the lowest is the University. Rather it is fairer if rents are at a level to cover costs and, providing this continues to allow fair and open access, the extra income is used for selective assistance or improvements in other areas of the College.

Notes

  1. Council decided in June 1999 to increase rents by 8.3% pa plus inflation for four years, and then to review the position. This was the lowest average rate of increase that could bring King’s rents in 2004/05 into the band suggested by the Bursars’ committee for rents.
  2. It is now clear that the data the College provided to the Bursars’ Committee were incorrect, in that some heating charges were excluded inadvertently. If heating charges had been included, a lower minimum increase would have been recommended by the Bursars’ committee and Council would, in all likelihood, have adopted an increase less than 8.3%.
  3. Students and some fellows have expressed great concern at the adverse effect the ultimate level of rents may have on access, particularly when account is also taken of the Kitchen Fixed Charge (KFC). It is important to note that "access" in this context is a broader term than "hardship", and includes the effect of higher charges on middle-income families; prospective students from such families may chose on financial grounds to attend another university even if they could afford Cambridge.
  4. Several Colleges have in place automatic bursaries or rent rebates for students eligible to receive the maximum LEA loan. King’s does not have such a system and historically has preferred to make financial assistance available on a discretionary basis. The intent has been, and will continue to be, to address all cases of clear hardship.
  5. The Bursar believes the College is running a serious deficit on student accommodation, and has for some time. This has a serious knock-on effect on College finances. Reliable accounts are not yet available to confirm this, and are unlikely to be available for several months. The Access Alliance disagrees and believes rents may already cover costs. The Bursar has prepared indicative numbers on two College buildings, and these are annexed.

Proposals for Immediate Action

  1. Rents for all accommodation for 2000/01 should be re-assessed on the following basis:
    1. If practicable in the time available, the College will obtain professional advice on the appropriate relative rents for different rooms, as has (for example) been done at Trinity. This will be part of a total assessment of all accommodation in College.
    2. New rents should be set for all rooms for 2000/01, so that:
      1. the aggregate rent chargeable is 6.5% plus inflation more than the aggregate of all rents and heating charges for 1999/00 (this is reduced from the 8.3% approved by Council in June 1999 for the reason given in paragraph 6 above;
      2. rent will be re-based to apply to a 71-day term, running from the Saturday before full term starts to the Sunday 9 days after full term ends[2] (64 days in the Easter term); this excludes days which students currently have rights to use and which are used by relatively few students; to reflect this change, the rents per term will be reduced by 3% from those calculated using the approach in (i) above;
      3. heating charges, including estimates for individual metered electricity and gas, will be included in rents and not itemised or charged separately;
      4. approximately 20% of rooms will have no rent increase and there may even be reductions from the 1999/00 level (it is anticipated that these will be among the cheaper rooms);
      5. the rents so proposed will be reviewed with student representatives in the light of recent demand and the advice on appropriate relative rents (see 10a) before being finalised;
      6. final figures will be available before room choices are made in the ballot.
    3. Taking account of the changes in paragraphs b.i and b.ii above, the average weekly rent in 2000/01 at 1999/00 prices will be some £47 per week including heating. This will be around the Cambridge average.
    4. There will be a review at the end of the winter 2000/01 of the individual room electricity and gas meters, to see if the practice of not itemising or charging for heating has led to any serious over-use. The result will inform the system for 2001/02.[3]
  2. The College will continue to work through the Senior Tutors’ committee to obtain information on costs at other leading UK universities.
  3. The Bursar will work to identify the true costs and revenues of student accommodation.

[1] King’s would not compete with a university where students can live at home or in concessionary accommodation.

[2] First year students will arrive a day earlier in the Michaelmas term and those in Keynes accommodation will be asked to leave by the Sunday after full term ends. The rent for that term will be reduced pro rata for such students.

[3] There will be no retroactive effect unless an individual’s heating use is considerably above the assumed average (eg double).

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