Families face £38,580 property bill to avoid school VAT tax raid | Personal Finance | Finance

Parents are getting involved in expensive bidding wars costing tens of thousands for homes close to outstanding state schools amid claims they are being priced out of sending children to private primaries and secondaries.

Rising fees in private schools, exacerbated by Labour’s decision to add 20 percent VAT to fees, means tens of thousands of parents are looking for high performing state schools as an alternative – even though it can cost them nearly £40,000 to be near the best state schools.

Research from estate agents Hamptons found almost one third of homes near state schools listed as “outstanding” by Ofsted have received three or more bids in the past six weeks, which is 40 percent more than the average.

At the same time, new research from wealth management firm Saltus claims more than one in ten families (13 percent) with children in private schools plan to move them into a state school for this academic year.

The Chancellor Rachel Reeves says the money raised from adding VAT to private school fees will be used to fund free breakfast clubs in thousands of state schools across the country.

Aneisha Beveridge, head of research at estate agency Hamptons, said: “The draw of top-rated schools means that homes within these catchment areas often come at a cost and command higher prices on average.

“It looks as though competition is heating up a bit with 28 percent of homes near these top-rated state schools receiving three or more offers during the last six weeks, compared to an average of 20 percent across the whole market.”

Competitions is particularly fierce in Kent, which has almost 40 grammar schools and more than any other local authority in Britain.

Linda Wesson, prime director at Hamptons in Sevenoaks, said her office is dealing with inquiries from private school families looking to move to get into a Kent state school “all of the time”.

She said: ““What is so interesting is that since the election we are now getting inquiries from families from south-west London.

“We are getting a lot of inquiries from families in Richmond and Putney and they all want advice on primary schools and grammar schools.”

This is confirmed by private school tutors in south west London, who have seen a surge in the number of parents switching from private secondary schools to high performing state alternatives, such as Tiffin Boys and Tiffin Girls, both in Kingston borough.

Homeowners are paying a premium of £38,580 to live near an “outstanding” state school compared to one rated “good”, the research found.

The Saltus study looked at the education plans of high net worth individuals (HNWI). It surveyed 2,000 people with more than £250,000 in assets and also found one in ten (10 percent) are considering leaving Britain to avoid tax rises on the wealthy.

The research discovered that many wealthy parents were already struggling with the rising cost of private education before the VAT rise, which will come into effect in the new year.

To finance school fees, one in five (22 percent) said they could be moving house to be nearer a more affordable school. And 18 percent said they are already receiving – or will need – financial support from friends and family to continue to afford the fees.

Mike Stimpson, Partner at Saltus said: “The decision by the new Government to add VAT to school fees has been, understandably, an unpopular one with HNWIs, especially when it was announced that the policy would be implemented in January rather than waiting until the next academic year. This decision, as we can see from our research, will impact more than half of families with children at private school, with 13 percent of children possibly removed from their existing school and moved into state education in the next year.

“Even before the VAT announcement, our study shows that price rises over the past few years were already having a significant impact on parents’ ability to pay, with many forced to borrow to keep their children in their current schools.”