The survival of one of the UK’s oldest independent cinemas is under threat while its landlord, the University of Oxford’s Oriel College, refuses to extend its lease to allow vital renovations.

The Ultimate Picture Palace in east Oxford opened in 1911, and has entertained generations of students and residents, including the Oscar-winning director Sam Mendes. It sells tickets for its 106 seats through an old-fashioned box office window to patrons queueing on the street, and its screen is behind a manually opened curtain.

After decades of instability, the UPP, as it is known by locals, recently became a community-owned business when more than 1,200 supporters raised funds to keep the cinema operating in the Grade II-listed building.

But plans to secure its long-term future have been dashed by Oriel College’s reluctance to approve an extension that would allow further investments and renovations to take place.

Micaela Tuckwell, the UPP’s executive director, said grants were available to improve the cinema’s energy efficiency and accessibility. The cinema’s operating costs have increased 25% over the last four years and it remains on a financial knife-edge. But the improvements cannot go ahead without Oriel agreeing to extend the current lease past 2037, which Tuckwell says is “a really big emergency”.

A spokesperson for Oriel College said: “This lease was agreed recently in 2022 with a new registered society. We have no plans to amend the lease at this early stage in the tenancy … We continue to be in dialogue with the new managers about how to ensure the cinema remains open to the wider public.”

The college already owns a number of properties in east Oxford, including those surrounding the UPP, and is said to be looking at expanding further, reflecting a wider trend of “studentification” opposed by many locals, such as the pending demolition of a popular local cafe by the university.

Imo, a local resident, said: “Every closure from the university’s encroachment has a scarring effect – if this trend continues there will be no space for locals to do things on their own terms.”

Oriel’s provost, Neil Mendoza, also chairs Historic England, the public body tasked with championing the country’s historic environment and buildings.

A spokesperson for Historic England said: “We know cultural institutions, including cinemas, are important to local communities and can help to sustain our high streets and town centres. Businesses offering cultural experiences, through art, theatre, cinema, music, are often attracted to historic sites because these places really resonate with local people.

“We aim for historic buildings to be kept in use so they can continue to be anchors for communities and loved for longer.”

A campaign and petition to save the UPP has gathered 22,000 signatures while the MP for Oxford East, Anneliese Dodds, last month raised the UPP’s future in parliament. Dodds told the Guardian: “I have discussed this matter with Neil Mendoza and he has said he wants to work with the UPP. I really hope that can happen.”

In March, Mendoza and Oxford University’s vice-chancellor, Irene Tracey, attended a special “Save the UPP” screening of Hamnet hosted at the cinema by Dame Pippa Harris, the film’s Oscar-nominated producer.

Malcolm Atkins, a 69-year-old local artist, said he has been a regular at the UPP since the 1970s. “All the films I still love best I saw there – A Touch of Zen, Celine and Julie Go Boating … the cinema was so good for long, meditative films, and I haven’t experienced cinematic wonder comparable since,” he said.

The UPP is still known for alternative and artistic programming, with foreign language films accounting for more than a fifth of ticket sales and a similar proportion for classic or repertory features. Despite the post-pandemic fall-off in national audiences, the UPP said its ticket sales were up 20%, with a quarter of its sales to under-25s.

Kit Finnie, the UPP’s lead projectionist, says the organisation does a lot to battle social isolation, with a two-year waiting list to volunteer and collaboration with local charities such as Asylum Welcome.

Finnie said: “This is a really safe and consistent interaction: coming here, feeling OK that you’re by yourself, and sitting with a tea or coffee to interact with a piece of art. This is the only affordable way to have that interaction.”