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.

Objectives

3. It is proposed that student rentals should be set in the following framework:
   1. King’s believes that Cambridge University will damage access if its rents are significantly greater than those charged in comparable universities.
   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 rents should cover, more closely than at present, the costs of providing student accommodation and the aim, in the long term, should be to break even. In calculating this, the cost of funds appropriated from endowment will be taken into account but no return will be expected on the capital investment in historic accommodation blocks.  Account will be taken of maintenance and renewal costs of all accommodation and amortisation of modern accommodation blocks.
   4. The College will continue to work at keeping the costs of providing student accommodation as low as is consistent with providing accommodation of an acceptable standard.
   5. If it is clear that there is an access issue arising from having rents that more closely cover costs, the College remains committed to making arrangements to address the problem.
   6. 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.
   7. Relative charges for different rooms should feel fair.
4. 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.
5. There has not been sufficient time to reach complete agreement on the interpretation of comparability and how this should be determined. This will be one of the first topics to be discussed and resolved by the new Access and Welfare Committee, see paragraph 14. When discussing "comparability", the following factors should be taken into consideration:
   1. "leading competitor universities" is likely to include a reasonable number (15-30) of the leading UK universities, recognising that there are special cases such as London where extra loans are available and that many prospective applicants to Cambridge will see relatively few of these universities as strong alternatives;
   2. comparison of our charges to those at other institutions is likely to focus on per week fixed charges with consideration for other factors such as contract lengths. It also will take into account other fixed charges (such as the kitchen charge) and other living costs (such as travel).

Notes

6. 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.
7. 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%.
8. 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 choose on financial grounds to attend another university even if they could afford Cambridge.
9. 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.
10. 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 Within the College

11. 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]
    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 7 above);
       2. the Saturday before full term starts to the Sunday 9 days after full term ends[3] (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 for 2000/01 only - rents for subsequent years will be reviewed when more detailed accounts are available and after continued discussions with students about any possible effects of costs and charges on Access, see paragraph 14;
       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, or £56 including the Litchen Charge.  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[4].
12. The Bursar will work at producing more reliable accounts for the College, in particular to identify the true revenue from and costs of student accommodation, and how the Kitchen Charge (see 13) is used.
13. The College Charge will be renamed the Catering or Kitchen Charge to reflect how the income from this charge has been and will continue to be used[5], at least in the short-term, until more detailed College accounts are produced.
14. The College Council will set up an Access and Welfare committee to discuss issues arising from financial and related matters. Hence, among topics that the committee will address are the background to and reasons for any proposed rent increases, how to ensure financial information reaches prospective as well as current students, and the balance between costs to students and the quality of facilities provided to them (e.g. tutorial and academic support).  In particular, the Committee will provide a forum for students to be involved in discussing rents and similar charges, as well as what costs are relevant. A more detailed constitution, including recommended membership, is to be agreed by the Council following recommendations from the Bursar, Senior Tutor, KSCU Coordinator, KCSU Chairperson and KCGS Chairperson. Subject to the agreement of the College Council, the Committee will comprise Senior and Junior Members, with the number of Junior Members being at least equal to that of Senior Members.
15. The Finance Committee will continue to review costs within the College in order to effect savings where possible, especially those associated with student accommodation.

Proposals for Immediate Action Within the University

16. The College will request the Senior Tutors' Committee to consider how to promote Access issues at the University level and will suggest the establishment of an appropriate committee.  This Committee should consider ways in which information on costs at other leading UK universities can be obtained.
17. The College will support the establishment of a sabbatical CUSU Access Officer providing an appropriate case for this is prepared by students (KCSU and/or CUSU).

5 February 2000