The huge house price premiums some parents are paying to live near top schools has been revealed, with some shelling out hundreds of thousands for a place in the right catchment area.
On average, Britons are paying £116,000 more to live near an Ofsted rated ‘outstanding’ school compared to an ‘inadequate’ one, according to the online estate agent Yopa.
Living close to a good or outstanding school matters to parents because every state school has a limited number of pupils it can admit each year.
Catchment areas exist so that when too many children apply, the school can use geographical location to narrow down the pupils it will admit.
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In demand: Higher house prices generally correspond with better schools, according to Yopa
Yopa’s analysis of almost 18,500 schools in England found that property costs an average of £359,000 near schools rated as ‘outstanding’.
That compares to an average house price of £305,000 near ‘good’ schools, an average of £277,000 in postcodes where a school ‘requires improvement’ and a typical house price of £243,000 near where schools are branded as ‘inadequate.’
While the differences in house prices may be vast, it is important to note that this is influenced by other factors in the local area, as well as its schools.
On average, house prices in postcodes boasting an outstanding school have a 2.8 per cent price premium compared to the average found across their wider local authorities.
For ‘good’ schools, the postcode price is roughly the same as the wider local authority, according to Yopa.
Meanwhile, in catchment areas when a school ‘requires improvement’ the average house price of £277,000 is 4.6 per cent below the local authority at £291,000.
For ‘inadequate’ schools, living nearby typically means the house price costs 10.4 per cent less than the wider local authority, at £243,000 compared to £271,000.
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Premium: It costs £116,000 more to live near an ‘outstanding’ school compared to one that ‘inadequate’, according to Yopa’s analysis
Where does it cost most to live near a top school?
The biggest chasm between the cost of property near a school and the surrounding area is in Devon’s TQ8 postcode, according to Yopa’s analysis.
It costs a huge £822,000 to live in the same outcode as ‘good’ rated Salcombe Church of England Primary School, almost 152 per cent higher than the average price in the rest of the local authority area of £327,000.
That said, Salcombe is a highly desirable coastal area where house prices are elevated.
In the Northumberland’s NE20 postcode there are six schools, with five rated ‘good’ and one ‘outstanding’.
Living in that same postcode costs £450,000, which is almost 122 per cent more than the typical price in the area of £203,000.
It’s a similar story in Cumberland, where the CA12 postcode boasts four ‘good’ schools and one ‘outstanding’ school and commands an average price of £378,000 – again almost 122 per cent more than the average local area price of £170,000.
However, while it typically costs more to live near ‘outstanding’ schools, Yopa’s analysis found that it’s not always the case.
For example, house prices in the S4 postcode with the ‘outstanding’ St Catherine’s Catholic Primary School (Hallam) in Sheffield are almost 58 per cent less than the local authority price of £221,000.
And the East Sussex postcode of TN3 is home to an average house price some 121 per cent higher than the surrounding area, despite the fact that St Michael’s Primary School is rated as ‘requires improvement’.
What will private school VAT mean for house prices?
Labour has said it will start charging VAT on the income private schools make from fees, and this could result in schools passing on the 20 per cent increase to parents.
The added VAT is also expected to be introduced incrementally, rising over five years to the full 20 per cent standard rate, though this has not been confirmed yet.
The fear is that this could create unprecedented competition among families looking to take their children out of private school and secure a home in popular state school catchment area.
This could result in a bigger house premium close to good or outstanding schools.
Verona Frankish, chief executive of Yopa said: ‘Labour’s move to scrap VAT relief on private schools will make attending more expensive, which could persuade more parents to put their children into highly rated state schools.
‘Living near a good state school already commands a premium, and if more are persuaded to move nearby that could cause the gap in price between the best and worst schools to further widen.
‘Currently there’s a gap of £116,000 between the best and the worst schools, however some will see that as a worthwhile investment to give their children the advantage of a better education and it’s fair to say that those who can afford private education for their children are better positioned to stomach these higher property prices.
‘This could see more homeowners priced out of areas with higher rated schools, but as always, it pays to do your research, as despite the general trend it isn’t always expensive to live near the UK’s best schools and some of the best actually offer relative affordability when compared to the wider area.’
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Price gap: With Labour’s plan to scrap VAT relief for private schools, more parents may see it as more cost-effective to put their children into quality state schools in the years ahead
More parents seek homes near top grammar schools
Demand for the best rated schools is already surging, according to OnTheMarket.
The property portal revealed that since the General Election, when Labour’s proposed tax levy on private school fees became a reality, searches for homes around some of the UK’s top-rated grammar schools saw an increase of up to 166 per cent as parents rushed to secure alternatives.
Homes within five miles of Birmingham’s King Edward VI Camp Hill, in the B14 postcode, saw the biggest spike in interest with searches throughout July up 166 per cent compared to July 2023.
It was a similar picture in the South East, with searches for homes around Dartford Grammar School in Kent (DA1) 151 per cent above the equivalent period the year prior, followed closely by St Olave’s Grammar School in Orpington (BR6), just 10 miles away in South East London, at 143 per cent to complete the top three.
Jason Tebb, president of OnTheMarket, said: ‘The UK’s top grammar and state schools have seen a marked increase in applications and interest since the plans to levy VAT on private school fees were confirmed, with reports in the last few weeks alone of many receiving record application numbers and speculation over the impact on their local property markets.
‘While the majority looks to be concentrated in the south of the country, it shows the concern extends well beyond London and the Home Counties, with some of the most notable uplifts in the Midlands and South West.’
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