The two subjects most likely to come up in today’s dinner party conversations are probably house prices and children’s education. So if you are invited to dine in Brighton or Hertfordshire, expect some heated discussions on the way new schools admissions policies have undermined a time-honoured way of getting a decent, free education for one’s children – moving next door to a good state school. And if other areas follow Brighton’s lead, brace yourself for similar conversations across the country.

Brighton & Hove City Council has changed its secondary school admissions rules so that you can no longer guarantee your children a place at a school of your choice simply by buying into that school’s catchment area (see box).

This change of policy could have repercussions for house prices in Brighton & Hove and further afield if other councils follow its lead as there is usually a premium on properties in good school catchment areas.

Brighton & Hove council says its aim is to increase opportunities for people living far from the popular schools. It has been accused of social engineering, because in practice the new scheme will help people in relatively poor areas, at the expense of residents of affluent areas.

The new policy in Brighton is only possible thanks to a recently revised version of the national code for schools’ admissions, which now explicitly permits selection by lottery.

Some observers are now predicting that property price premiums in school catchment areas could become a thing of the past. This type of premium “must erode over time if lotteries become more widespread”, says Milan Khatri, chief economist at the Royal Institute of Chartered Surveyors (RICS).

These premiums can be substantial. The institute estimates that, on average, they add 8 per cent to a property’s value. Estate agents say living near a popular school can easily add £50,000 to the price of a typical family home in the south-east. In London the premium can reach £100,000, which is more than the cost of putting a child through a top independent school for five years.

Househunters are willing to pay this kind of money because they hope to get it back when they sell the house to the next generation of ambitious parents. But school lotteries raise the alarming prospect of buying a house next to a sought-after school, only for a change in admissions rules to cut the ground from under your feet.

“I think it’s inevitable that there will be a watering down of catchment areas and prices will be affected,” says Liam Bailey, head of residential research at Knight Frank, the property group. “What can you do if you’re looking to move now and the policy has not been finalised? It’s a difficult one.”

In fact, catchment area premiums appear to have been softening even before this year’s fuss over admissions lotteries. According to the RICS, the average premium has fallen by a third in the past three years. This could simply be because UK house prices rose by a third over that period. Bailey suggests another factor – house prices around popular schools are rising more slowly than the national average, because they are starting from a higher base and people
simply cannot afford to bid up the prices much further.

Bailey says uncertainty over admissions rules could deter parents from paying a premium. “There’s no doubt people will think a lot harder about paying a premium for a catchment area,” he says. “The question in parents’ minds will be ‘what’s the point?’” As a result, he predicts a “levelling out of prices”.

Back in Brighton, estate agents are preparing for a changing landscape. “People have bought houses in particular areas to get into particular schools,” says Paul Wilkinson, a branch manager at estate agent Mishon Mackay. The admissions lottery, he says, “will have an impact on house prices in these areas. Prices will come down”.

Get alerts on Front page when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.
Reuse this content (opens in new window)

Comments have not been enabled for this article.

Follow the topics in this article