Education premiums

We’ve all heard the phrase ‘location, location, location’, reminding us that often the most determining factor in the price of a house is the location, and what’s nearby.

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Unless you’re able to send your children to a private school, then you’ll need to live in the catchment area of a good state school. So living close to a great school can play a huge part when looking for a new home and comparing mortgages to see what you can afford.

But how much does living nearby one of the country’s best schools inflate the price of your new home? Here’s a look at how house prices vary around the country when broken down into areas that contain a school rated “outstanding” by Ofsted, and those that haven’t.

Areas with the biggest premiums

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1. Sunderland, North East
Areas without an "outstanding" school: £125,917
Areas with an "outstanding" school: £176,326
House Price Difference: 40.03%

The area where you’ll pay the biggest premium if you want to live near an outstanding school is Sunderland, in the North East. Here, the average house price jumps 40% if the surrounding area contains an outstanding school!

2. Durham, North East
Areas without an "outstanding" school: £154,791
Areas with an "outstanding" school: £215,646
House Price Difference: 39.31%

Not too far behind Sunderland is another city located in the North East, Durham. Here, houses in areas with a top school are 39.31% more expensive than those without. Durham is a city with great history when it comes to education, as the home of England’s third oldest university. The University is also ranked as one of the best in the world.

3. Blackpool, North West
Areas without an "outstanding" school: £158,753
Areas with an "outstanding" school: £208,846
House Price Difference: 31.55%

Another northern area completes the top three. Residents of Blackpool have to pay an extra 31.55% if they want to live in the vicinity of one of its best schools. Blackpool is one of the areas with the fewest schools rated as outstanding, at just 9.52%. This is perhaps why it costs so much to be near one.

Areas where “outstanding” areas are cheaper

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1. Wakefield, Yorkshire and the Humber
Areas without an "outstanding" school: £307,866
Areas with an "outstanding" school: £210,137
House Price Difference: -31.74%

However, not all areas experience this “education premium” and nowhere is this clearer than in the West Yorkshire city of Wakefield. Here, houses in areas with outstanding schools are actually more than 30% cheaper on average than in areas without.

2. Wolverhampton, West Midlands
Areas without an "outstanding" school: £234,242
Areas with an "outstanding" school: £182,181
House Price Difference:  -22.23%

The same is also true in Wolverhampton, where homes that are close to some of the best schools are actually 22% cheaper on average. Wolverhampton is home to a number of historic schools, such as Wolverhampton Grammar School, founded in 1512, The Royal School, Wolverhampton, and Tettenhall College.

3. Watford, East of England
Areas without an "outstanding" school: £669,635
Areas with an "outstanding" school: £553,283
House Price Difference: -17.38%

Another town which goes against the trend of houses near good schools being more expensive is Watford, north of London. Here, a house in a postcode sector with an outstanding school is 17.38% less than in those without.

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1. Kensington and Chelsea, London - 60.00%

If you want your children to have the best chance at a good education, then the area with the most outstanding schools is Kensington and Chelsea. Unsurprisingly though, this comes at a high cost. In fact, Kensington is the most expensive place to live in the whole of the UK, with an average house price of £1.38 million.

2. Richmond upon Thames, London - 49.15%

Another London borough comes in second place, with just under half of the schools in Richmond upon Thames being rated as outstanding by Ofsted. On top of this, every single secondary school in the borough is rated at least ‘good’. Yet again, though, you’ll pay a hefty premium for living there with average house prices of £980,000 according to Zoopla.

3. Harrow, London - 44.07%

Perhaps unsurprisingly, each of the top three areas is found in London, with just four of the top 20 located outside the capital. Harrow gives its name to the major boarding school located in the borough, but it clearly also excels when it comes to state schools too.

Areas with the most outstanding schools outside of London

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1. Trafford, North West - 35.87%

Given that so many of the country’s best schools are in London, here’s a look at the best areas outside the capital. Trafford, in Greater Manchester, is the highest-rated, with over a third of its schools being rated outstanding. The borough also regularly ranks as one of the best local authorities when it comes to grades too.

2. Windsor and Maidenhead - 32.84%

While the next highest-ranking area technically is outside of London, it’s not a million miles away. Windsor and Maidenhead is the next best area outside the capital with 32.84% of schools rated outstanding. The Royal Borough is located just outside of Greater London and is home to a number of outstanding schools.

3. Gateshead, North East - 32.14%

Not too far behind Windsor and Maidenhead, with 32.14% of schools being outstanding, is Gateshead, in the North East. Gateshead’s schools regularly achieve results that are well above average. The area is also home to a wide variety of schools including Jewish, Roman Catholic, Church of England, Methodist and non-religious state schools.

Areas with the fewest outstanding schools

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1. Isle of Wight, South East - 0.00%

Excluding the Isles of Scilly (which has just one school), only one area in the whole country has zero outstanding schools, the Isle of Wight. The island has 49 schools, but as of the most recent inspections, none were able to secure a coveted outstanding rating.

2. Dudley, West Midlands - 6.54%

The local authority with the next lowest number of outstanding schools is Dudley, where just 6.54% of schools reach that level. Dudley is located nearby Wolverhampton, which was one of the cities where living near an outstanding school was actually cheaper.

3. Middlesbrough, North East - 7.27%

Not far behind Dudley with just 7.27% of schools being rated as outstanding is Middlesbrough in the North East. The town’s postcode area, Teeside, was amongst the areas that paid the biggest premium to live near an outstanding school, an average of 22.8%.


What is Ofsted?

Ofsted is the Office for Standards in Education, Children's Services and Skills and is a government department responsible for inspecting educational institutions in England. As well as schools, they also inspect the likes of childcare, adoption and fostering agencies, early years and children’s social care services.

Do private schools have Ofsted?

Ofsted inspects all state schools, but not all private schools (referred to as ‘independent schools’ by Ofsted). Around half of private schools are inspected by Ofsted, with the remaining ones being inspected by either the Independent Schools Inspectorate or School Inspection Service.

What is outstanding teaching to Ofsted?

“Outstanding” is the highest grade available when a school is being inspected by Ofsted. They define an outstanding lesson as “one where the students show clear evidence of learning” with “no significant areas for improvement and lots of strengths”. The inspectors will particularly look at how well students are responding to teaching and the specific things that they’re doing and learning.

How often are outstanding schools inspected by Ofsted?

If a school has been judged to be outstanding or good in its most recent inspection, then it should receive another inspection within around four years. However, this won’t be a full, graded inspection, but what is known as a section 8 inspection. If there is evidence that a school has improved or declined considerably, then a full, section 5 inspection will be carried out.

Top reasons for relocating

Ofsted ratings are just one of the factors many people take into consideration when relocating to a new area, along with jobs, retirement opportunities and beautiful surroundings! Here are some of our moving home guides to offer up some inspiration if you’re thinking of changing your address:

Methodology and sources

First, identified each postcode sector in England that contains a school rated as ‘Outstanding’ by Ofsted at the latest inspection using the Ofsted website. Each postcode sector that contained a primary or secondary school with an outstanding school was identified (a postcode sector is a postcode area to the first digit after the space, such as WC2N 5).

The average house price in each of these postcode sectors was then sourced using HM Land Registry’s Open Data.

Finally, for each postcode area (such as WC for West Central London), the average house price was found for both the postcode sector with and without an outstanding school, before the difference was calculated.

The percentage of schools rated outstanding at the latest inspection was sourced from Ofsted’s state-funded schools statistics.

About James Andrews 

James is our senior personal finance editor and has spent the past 15 years writing and editing personal finance news. He has previously written for ReachPLC, was money editor of Mirror Online and Yahoo Finance UK, and has recently been quoted in City AM, Liverpool Echo and Daily Record as well as featured on national radio shows TalkRadio and the BBC

View James Andrews’ full biography here or visit the press centre for our latest news.

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About James Andrews

James has spent the past 15 years writing and editing personal finance news, specialising in consumer rights, pensions, insurance, property and investments - picking up a series of awards for his journalism along the way.

View James Andrews's full biography here or visit the press centre for our latest news.