Paying more to live near a top school

Paying more to live near a top schoolThe debate about selective education is hotting up, with prime minister Teresa May proposing to lift the ban on grammar schools.

Last week she said, “The truth is that we already have selection in our school system – and it’s selection by house price, selection by wealth. That is simply unfair.”

New research by Lloyds Bank has found that parents are willing to pay a significant premium to live in an area close to a top performing school.

Average property prices have reached £366,744 in the areas closest to the top performing state schools in England.

This places average property prices at 17% above the average for those counties, which is £313,318.

It’s an increase of 31% from last year, showing that parents are willing to pay more to live near to the best schools.

Lloyds Bank found that homes near Beaconsfield High School in Buckinghamshire pay the highest premium, at £629,021, which is 171% compared to the average house price in neighbouring areas.

The research looked at the top 30 state schools in England, those which achieved the strongest GCSE results last year, with homes typically trading at a premium of £53,426 – or 17% – compared to the county average of £313,318.

In six of the top state schools, nearby properties command a price premium of more than £150,000 compared to their surrounding area.

House prices in the postal district of The Henrietta Barnett School trade at a premium of £429,506 (74%) compared to the whole of Barnet – the second highest premium.

This was followed by Sir William Borlase’s Grammar School in Buckinghamshire (premium of £220,082) and The Tiffin Girls School in Kingston upon Thames (£192,011 premium).

In addition to securing a place for their children at one of England’s current Top 30 state schools, buying a home nearby is also proving to be a shrewd investment.

Parents who bought a home near one of the top 30 schools just before their child first entered secondary school in 2011 have seen an average house price rise of £76,000, from £290,683 to £366,744, in 2016 – an increase of 26%.

This is a significantly faster rise than in England as a whole, where the average house price has grown over the same period from £240,208 to £282,353 – an increase of £42,145 or 18%.

Of course this is no guarantee that house prices will continue to behave like this in the future.

Andrew Mason, Lloyds Bank Mortgage Products Director, said:

“Schools with the best exam performance are proving to be an increasingly strong draw for home movers, as we’ve seen house prices rise sharply in locations close to such schools.

“Our analysis shows that since 2011 average house prices in areas with the best state schools have increased by £76,000, compared to a national increase of £42,145. And seven of the areas covered in this survey have seen house prices rise by over £100,000 in the last five years.

“The popularity of areas close to high performing schools may mean that homes remain unaffordable for buyers on average earnings.”

Relaxing the current restrictions which stop selective schools from expanding and giving parents more choice could reduce the pressure on houses closest to the top performing state schools.

Whatever your views on selective education and grammar schools, it is important to factor all of the costs of educating your children or grandchildren into your long-term financial plans.

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