OXFORD’S two universities are ready to fight a council policy that could force them to hand over millions towards social housing in the city.

They claim a new policy to make the universities contribute to Oxford’s housing shortages will cause serious long-term damage.

The rift between the universities and Town Hall will be laid bare at a public inquiry in September.

The policy, introduced in December, adds a significant cost to student accommodation – with a new charge of £140 per sq metre, plus a five per cent administration charge.

It is designed to deter developers who increasingly build student accommodation instead of new homes to avoid affordable housing contributions of up to 50 per cent.

Oxford Brookes University says for a scheme, the size of its recent 313-bed Dorset House development, would mean handing over £1.37m for affordable housing.

In its submission to the inspector, the university said: “The university’s educational activities and contribution to the local economy will be affected.

“If rent levels have to be increased due to the requirement to make very substantial affordable housing contributions then the university’s place in the league tables will decline.”

Oxford University says it should be exempt because accommodation developments rarely brought commercial advantage.

It said the policy would increase the number of students living in the private market rented housing.

It added: “It could result in a detrimental impact upon the success of the university both of intellectual capital and economic activity.”

The universities will challenge the policy when the city council’s Sites and Housing Development Plan goes to an examination in public.

The city council said ideally it would like to see 50 per cent of the value of developed land given as a financial contribution from student accommodation developments.

Colin Cook, city council board member for city development, said the policy would not apply to schemes already under way.

Mr Cook said: “We had to tighten up to stop speculative applications coming up for student accommodation here there and everywhere.”

A bursars’ group representing the views of 38 university colleges also criticise moves to restrict the number of houses in multiple occupation in some areas, with students “almost entirely blamed for problems”.

However, residents are urging the city council not to bend under pressure.

Stephen Law, of East Oxford Residents’ Association Forum, said: “We are deeply concerned that an alliance between the university, the Oxford student union and landlords threatens to derail the excellent policies the city council has adopted to roll back student ghettos in many parts of East Oxford, Headington an central Oxford.”