James and his wife have been looking hard at their finances lately. The couple have two children. The elder attends a private school that costs more than £7,500 a term; the younger, aged 11, is a day pupil at a prep where termly fees are more than £8,000. Rising costs mean that, instead of automatically following his sibling, last month the younger child sat the 11-plus exam to try and win a place at a grammar school in Salisbury.
“School fees went up by 8.5 per cent this year, and we are already paying about £25,000 a year just for prep school,” says James, who lives in Hampshire and declined to give his real name. “If VAT is added, as is looking increasingly likely, we will have to look hard at the different options. We can’t bankrupt ourselves just to get our children into the same school photo.”
Many parents across Britain are doing similar calculations to anticipate the possible impact of the Labour party winning the next general election, widely expected to be held in about a year’s time. At the party conference this week, the shadow chancellor Rachel Reeves reiterated Labour’s commitment to introduce 20 per cent VAT on private school fees if it wins, and to start charging full business rates on fee-paying schools in England and Wales, as already happens in Scotland. The revenue raised is to be used to increase spending in state schools — which educate about 93 per cent of children — and targeted at pupils from disadvantaged backgrounds.
For some, such as James, a substantial increase in fees means possibly sending their children to different schools from the ones they had hoped. Others are making a complete life shift — moving to another part of the country or selling their house to free up cash.
At the same time, there are those who can afford to pay the higher fees who have decided to move their children into the state-school system for an entirely different reason: to better their chances of getting into Oxford or Cambridge, which, in a drive to be more inclusive, have been accepting a greater proportion of pupils from state schools in recent years.
All of which are adding more demand to the already pressurised property markets surrounding the UK’s top state schools.
“There is a huge amount of interest now in grammars and moving to grammar school catchment areas,” says Ben Horne, head of country buying at Middleton Advisors buying agency, referring to England’s 163 government-funded selective schools, which are widely believed to provide a better education than its 3,000 or so state secondaries.
“It is still early for the consequences of the Labour policy to be seen but it’s coming up in conversation all the time with clients and at the school gates,” he adds.
Private school fees have been rising sharply for years. The Institute for Fiscal Studies (IFS), a think-tank, says that in real terms average independent school fees have increased by 20 per cent since 2010 and by 55 per cent in the past 20 years. This year, school fees increased by an average of 5.6 per cent, according to the Independent Schools Council (ISC), marking the highest annual rise since 2009 and taking the average yearly fee for a day school to £16,656.
Fortunately for James and his wife, they live close enough to the Salisbury grammar school that, if their child wins a place, it is a drive or bus ride away. Rebecca and Simon, however, are planning a significant move in order to get their child into the state school they want.
The couple, who are in their early forties and have daughters aged nine and six, are moving from south-west London to Kent. As such, they are joining a long — and growing — queue of parents homing in on the county, which has the highest number of grammar schools in England, in the hope that their children will win places.
“Our top choices would be Weald of Kent Grammar [which accepts boys in the sixth form] and Cranbrook School [a co-ed],” says Rebecca, who did not want to give her last name. “Until quite recently, the plan was to do state [school] until eight and then move them to private for the rest. We can’t now risk starting down that route only for fees to possibly shoot up.”
Well-off parents buying into preferred catchment areas is nothing new and for years families have been moving to Kent for the grammar schools, but demand has notably intensified in recent months, says Linda Wesson, director of prime country sales at Hamptons estate agency.
Some of the buyers are parents with newborn babies who are planning years in advance — a risky strategy, given there’s no guarantee their children will pass the 11-plus exams which permit entry. Also, some catchments are already small and could shrink further if grammars become more popular.
“We have a family living in Kent who are just outside the catchment areas for Tunbridge Wells Girls’ Grammar School, known as TWGGS, and Tonbridge Grammar, so they are selling up and moving to a specific part of Tunbridge Wells,” says Wesson. The mother is a teacher, Wesson adds, and the family is keen to have the option of that school open to them down the line.
As interest in grammar schools has grown, so tutoring has boomed. According to social mobility charity the Sutton Trust, 30 per cent of young people now report having had private tuition, up from 27 per cent before the pandemic and 18 per cent in 2005.
“As well as more demand for tuition to boost basic English and maths skills since the pandemic, we have seen a sizeable increase in 11-plus tutoring,” says Chris Pearse, managing director of tuition company Teachitright. “Parents would prefer to spend on tuition support rather than the more expensive option of independent schools.”
Other parents are looking closely at areas with excellent state primaries and non-selective secondaries. A year ago, proximity to state schools rated good and outstanding by Ofsted was a middling priority for clients using Garrington Property Finders to source them a home, far behind other categories such as the size of the home or having a south-facing garden. Now, though, being close to an outstanding state school is the top priority in a significant and growing proportion of instructions. “In many cases, being in catchment is a non-negotiable,” says the company’s managing director Nicholas Finn.
In Dorset, Neil Roff, of Winkworth estate agency in Poole, says about 50 per cent of people moving to the area are relocating for access to good primary schools, notably Ofsted-outstanding Lilliput Church of England infant school and Baden-Powell and St Peter’s CE junior school.
Meanwhile, in parts of south-west London, parents go out with pedometers to check their exact distance to the school gates, according to Melanie Sanderson, managing editor of The Good Schools Guide. “You need to be within 250 metres of somewhere like Honeywell schools in Battersea or Hotham Primary in Putney to get a place,” she says. “People will pay top dollar for the houses there.”
Winchester in Hampshire is another place known for its excellent schools, including the high-performing state sixth-form college Peter Symonds. “For the past six months, I have been quizzed extremely carefully by parents about local schools in Winchester,” says Emma Seaton, director at the buying agency Prime Purchase.
55%The real terms increase in average private school fees over the past 20 years
It is well known that some parents try to game the system by moving their children to state sixth forms because they believe this makes them more likely to be offered a place at Oxford and Cambridge — indeed, of the five schools to send the highest proportion of sixth formers to Oxbridge in 2021, four were state sixth-forms, one being Peter Symonds (though private schools are still significantly over-represented among admissions).
“We have definitely seen more requests to support students to move from the independent to the state sector aged 16,” says Leah Warren, director of Watling Tutors. It’s a trend she puts down to the Labour policy, rising fees and the expectation that it “may positively influence Oxbridge applications”.
Rising interest rates are nevertheless taking their toll. “Even in areas close to great schools, it’s taking a lot of time and negotiating to get property deals done,” says Fiona Penny, a property finder working in Kent and East Sussex. “In some cases, it’s because people want to move but can’t sell their house.”
While mortgaged buyers’ spending power has been curtailed in recent months, proximity to the best state and grammar schools still comes at a significant premium.
Three and four-bedroom homes in the catchment areas for Altrincham boys’ and girls’ grammar schools in Greater Manchester, for example, can be significantly more expensive than similar homes nearby, says Phillip Diggle of estate agency Gascoigne Halman.
“The grammar school premium has pushed a semi-detached Victorian house into the realms of £800,000 to £1.5mn, compared to £600,000 to £1mn out of catchment,” he says.
In its analysis of areas with at least 5,000 pupils, estate agency Savills found that Harpenden in Hertfordshire was the top-performing school area in England, scoring well for the proportion of children in “outstanding” primaries and the average point score per pupil at Key Stage 4 (GCSE level or equivalent). It found that the average property price, at over £963,000, was 138 per cent more expensive than its East of England regional average.
All this means many families are being priced out. When Bruce King, director at Cheffins estate agency in Saffron Walden, Essex, brings a property to market in the catchment area for the Ofsted-outstanding Saffron Walden County High School, he says around 75 per cent of buyers are parents looking to send their children to the school.
Todd, his wife and four-year-old daughter live in a village in the catchment area for the high school, and a nearby outstanding primary.
“We are really lucky to live in the catchment area for two outstanding schools — it was the reason we moved to the village in the first place,” says Todd, 36, who works in asset management. “However, we are now thinking about moving to a bigger house and finding a property we could afford is proving increasingly difficult.”
The IFS estimates that removing tax exemptions from private schools would raise about £1.6bn a year in extra tax revenue. This is based on an effective VAT rate of 15 per cent after allowing for input deductions, VAT on boarding fees and exceptions for specialist provision, as well as extra revenues from business rates. The IFS says this would lead to a fall in private school attendance of between 17,000 and 40,000 pupils (3-7 per cent of the total), while the most recent ISC survey found that a fifth of parents said they would have to withdraw a child from independent school if VAT was levied on fees.
The impact of school fees on mortgage affordability is stark. Adrian Anderson, director of Anderson Harris mortgage brokers, recently helped a married couple, both aged 39, with two children at private school to work out what they could borrow to buy a house. The husband and wife have a joint income of £200,000 and currently pay total school fees of £36,000 a year.
When looking for a two-year fixed mortgage over 30 years, Anderson found that three leading banks would give the couple a mortgage of about £1mn if they paid no school fees, but this diminished to about £650,000 at the current £36,000 level. If fees went up by 15 per cent to £41,400 a year, the mortgage capacity would reduce to about £600,000.
Some people are actively downsizing now in order to pay higher anticipated bills. An estate agent in the east of England has three couples all selling large houses to pay future school fees.
One such couple, who live in Ely, Cambridgeshire, have three children — one aged 12 and another aged 10 who recently moved from a state school to a prep school, and a one-year-old. The family house has just gone on the market for £800,000 and they are hoping to buy one costing about £600,000.
“They were telling me how, at some point, they will have three children in private education and if fees go up so much, they just won’t be able to afford it,” the estate agent says. “Their children’s education is their priority and they are already feeling squeezed by energy bills and higher interest rates.”
For most parents, the prospect of moving house to get a better education for their child is out of the question. And Labour’s policy is designed to address a funding shortfall that is being felt in many schools. Research from the IFS found that school spending per pupil in 2024 will remain 3 per cent below 2010 levels in real terms once actual costs are accounted for.
What is more, schools in areas of long-term deprivation work against a backdrop of multiple unmet needs, says Helen Rafferty, interim chief executive of SHINE, an education charity helping disadvantaged children in the north of England.
“Despite the considerable commitment of educators, this makes their job harder compared to those in more privileged areas. Though additional funding is currently provided for children who meet the basic criteria for additional support, we would like to see an expansion of this funding to recognise the challenges posed by long-term and often complex deprivation,” Rafferty says. “Policies which can work to bridge some of these gaps and create a more equitable education system in which all children can thrive should be welcomed.”
Some parents, meanwhile, are turning to God — seeking out state faith schools that admit children with a proven record of church attendance. “Like lots of my friends, we have started going to church to make sure we have been doing it for enough years to get our son into the secondary we want,” says one mother from south-west London who works in marketing. “There’s a packed congregation on Sundays — the vicar must be delighted.”
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