Parents paying 15% premium on properties within top school catchment areas shows "myopia of this government"

PROPERTY experts have slammed the Labour government for failing to see the unintended consequences of VAT on school fees, as new research from Santander UK reveals that three-quarters of UK parents (73%) would be prepared to pay extra to be in the catchment area of a good school – up 11% on last year. One broker also says that some parents, following the imposition of VAT on school fees, are increasingly playing the system to get registered in top catchment areas.

The average price premium parents would be willing to pay to be in the catchment area of a quality school, Santander found, is 15%, which means stumping up a further £57,000 on a £380,000 property. One in 10 would go as far as paying over 25% extra. Parents would also be willing to uproot and move an average of 31 miles to bag a place in a top-tier school, which is nine miles further than a year ago.  

However, many parents may find that their appetite for stumping up more money isn’t enough, as Santander analysed the top 50 primary and top 50 secondary schools in the UK and found the average price of a home to be £538,490 - 42% higher than the average price of homes currently coming to the market in the UK (£379,517).   

Santander's research also found that the competition for state school places has worsened since the Government introduced VAT to private school fees. Over a fifth (21%) of parents whose children are currently at private school say they have plans to move them to a state school due to higher fees. Of this group, over two thirds (69%) say they will relocate to get their children into the best state school catchments.   

As a result, parents who had their eyes set on a state school are reporting added concerns for the future, with almost half (46%) saying they are worried about competing with those who will no longer be taking up a private school space.

David Morris, Head of Homes at Santander, said: “Competition amongst parents to get their child into their top choice primary or secondary school is fierce and it’s clear that this is taking a significant toll on families. Parents are understandably digging deep into their financial and emotional reserves to give their children a great education.

"There is good news for parents however, as a record number of properties coming to the market, combined with stabilising interest rates and improved affordability, will hopefully help some of them bag an outstanding home in their dream catchment area.” 

Adam Stiles, Managing Director at London-based Helix Financial Partners, said: “Sadly, this Government rarely sees past the end of its nose when it comes to the unintended consequences of policies. The burden now placed on the state school system by imposing the politically motivated VAT on private education has not only seen many private schools shut but is now pushing house prices up to unaffordable levels for the public as a whole.

"This is exactly the opposite of everything Labour claim to be about and doing. Everyone else could have seen this coming a mile off, bar those in government who are making the policies. The myopia of this government is almost unprecedented.”

David Stirling, Independent Financial Adviser at Belfast-based Mint Wealth, said some parents are now playing the system to secure their children's futures: “Parents can feel desperate when considering their children's futures and wellbeing, so those in a position to work the system will.

"I have had a client look to purchase a buy-to-let property within a school catchment area, simply to have a registered address to be able to apply to the school.

"Similarly, I've seen others consider a small rental property away from their main residence to have a footprint and address registered near a top school. People are resorting to desperate measures to hopefully reap the rewards.”

Michelle Lawson, Director at Fareham-based Lawson Financial, said the premium on properties near top schools effectively now amounts to a tax: “Location, location, location has always had a premium. Schools are a major factor, with many families wanting to time their home moves with school applications and their specific choices.

"This does put pressure on local areas, though, and effectively becomes a property premium tax. All of this is down to supply and demand as most things are. In the Portsmouth area and outskirts, this can be a massive problem as some siblings get allocated places at different schools in the catchment area.”

Justin Moy, Managing Director at Chelmsford-based EHF Mortgages, added: “Living nearer the best local schools has been a strong influence on home choice for many years, especially since Ofsted grading became public in 2007. Properties in those catchment areas with a school of an 'Outstanding' grade certainly see a premium on prices, as buyers need to be in situ before school places are allocated, and that timescale can push demand and cost higher than average.

"For example, in Chelmsford, there are a couple of 'Outstanding' rated Primary Schools, and those local areas can see property prices at least 10% higher than equivalent homes elsewhere in the city.

"Buyers often look to offer on a property they haven't even viewed, just to ensure they have that important address or postcode in time. It's not a coincidence that portals such as Rightmove show the local school catchment data, too.”

Aaron Strutt, Product and Communications Director at London-based Trinity Financial, added: "Many of our clients have paid more to buy houses next to good state schools, particularly since VAT was introduced on school fees. The closure of so many private schools was always going to make life harder for existing state schools, while increasing house prices on properties close to good schools."