Oxford unveils £4b partnership to tackle ‘unaffordability’ crisis
Oxford University has teamed up with Legal & General in a £4 billion partnership that will help the institution tackle problems concerning affordable housing in one of the UK’s most ‘unaffordable’ cities.
Under the deal, the insurance and pensions group will pump in £4 billion via its Future Cities fund to construct 3,000 homes and two science parks over the next decade. The 3,000 homes will include 1,000 subsidised homes for university and college workers, 1,000 homes for research graduates and a further 1,000 units for general sale or rent.
The homes will be built on university land, of which the school will retain ownership. Legal & General will be issued 60-year leases for the land and will collect rent but will eventually hand the properties over to the university.
“We look forward to working together to address some of the most pressing challenges facing the university today,” Prof Louise Richardson, the vice-chancellor of Oxford, said of the partnership with Legal & General.
“We will build much-needed graduate accommodation, subsidised housing for university staff, and new science parks, where academic departments, university spin-outs and commercial partners can work together to create new companies as well as high-quality jobs.”
The deal initially met with some skepticism from within Oxford, following concerns that the arrangement was akin to a private finance initiative that could lead to massive profiting by the university’s private sector partner. The university reportedly rejected the claim, however, and has established that it will control the rent setting.
According to The Guardian, junior academic and support staff earning below £40,000 year will be able to rent staff homes, which will include one- and- two-bedroom apartments and some houses, at a discounted rate of 20 percent of market prices.
“Our priority is to provide good-quality affordable accommodation for graduates and staff. If all goes well, we would hope to do more in future,” said university Pro Vice-Chancellor David Prout.
With a growing population of 155,000 Oxford is one of the fastest-growing cities in the UK. A university city on the leading edge of technological innovation and 21st-century education, the prestige and popularity of Oxford have created one major problem: a lack of affordable residential and commercial spaces essential for the university to continue attracting talent and supporting new business spinouts.
Like Oxford, the trend has also been observed in Cambridge. Data from property website Zoopla released last week said home ownership in Cambridge and Oxford are the highest in any city outside the London capital, requiring buyers to draw annual salaries of at least £72,000 and £69,000 respectively. The average price of a home in Cambridge is £422,000 while it is £407,000 in Oxford.
Both institutions have said the problem hinders their ability to attract staff and students in an increasingly competitive higher education landscape.
Cambridge is currently building 5,000 homes for staff and undergraduates with funds from a £350 million bond. Oxford’s £750 million bond, on the other hand, has already been earmarked for other projects.
In a Times Higher Education report, Prout said taking out more borrowing was unnecessary when the institution could find a private sector partner to fund the developments in exchange of rental income.
Legal & General chief executive Nigel Wilson said the cities playing host to some of the country’s top institutions, save for London, have experienced “under-investment for 20, 30, 40 years, particularly compared to the best cities in the world and indeed compared to London”.
But this will change, he noted, with Legal & General’s involvement. The firm, which manages over £1 trillion in assets, has previously partnered with Newcastle City Council and Newcastle University to build the Helix housing, research and office space development.
The firm is also keen on striking similar partnerships with other universities, saying the Oxford deal could be used as a model for more joint venture projects to modernise UK cities.