The removal of both VAT relief on school fees and potentially business rate relief have added to the growing financial challenges facing many private and independent schools. In response, their leadership teams may look to how their estate can form part of the solution, either to save or raise capital.
Independent and private schools often have complex and multi-faceted estates. With change underway in the sector, now’s the time to take stock.
The importance of examining the entire estate
It’s tempting to immediately turn to disposing of assets which are considered ‘redundant’ to raise funds, but before any decisions are taken, it’s crucial not to look at your buildings in a piecemeal fashion, but make decisions which preserve the integrity of your core school estate and prevent future regrets.
To do this, we advise a strategic review of your estate, taking a helicopter view of its condition and how it operates, including everything from classrooms, administrative buildings, staff and boarding accommodation, sport facilities and any other assets owned or leased by the school. This doesn’t need to be complicated exercise, but focused on understanding your estate by asking:
- How are property assets utilised? Are they being used efficiently or lying empty, or under-occupied for long periods?
- How do they function? How well do they support their intended user/s, or are they being used for functions beyond what was envisaged, or as a stop-gap as you don’t have appropriate space elsewhere?
Once you’ve asked these questions, you’ll soon be able to identify where the main challenges are, such as buildings that are in poor condition, underutilised, or unsuitable for modern day users. But this exercise will also unveil opportunities.
Setting priorities and spotting opportunities
Several of the main challenges identified are likely to be part of your core school estate, and highlight where investment is required to continue to provide the exceptional learning experience your students, parents and staff expect. These are your priorities for future investment in your estate, and any decisions should be assessed by their ability to meet these priorities.
Secondly, you should now also have identified where the opportunities lie to consolidate activities to generate efficiencies, and spot any surplus buildings or land which could be used for alternative uses, or potentially marketed for sale. In terms of the former, the options for generating extra income from activities beyond education can be lucrative, including events or being a filming location, and can be a great way to showcase and celebrate the strengths of your estate, and build your school’s brand. Before venturing down this route, however, you need to understand how viable these options are, and ensure that any changes or uses don’t have unforeseen consequences in affecting your business rates liability or your charitable status.
Doing your homework will bring long-term gains
It may sound like a challenging exercise, but ultimately undertaking a strategic review to understand the workings of your whole estate and establish your investment priorities will put your school in a better and more secure position for the future, enabling more informed decision-making.
For example, when exploring the release of an asset deemed surplus, you’ll do it in the knowledge it won’t impact your main operations, and can evidence with your investment priorities where the capital raised can be reinvested in your estate.
It’ll also be easier to achieve the support of trustees, governors, and parents when making decisions as you’ve undertaken a comprehensive analysis of all the options and their implications. This ensures no decision is taken in isolation and your core school estate remains protected.
.jpg)
.jpg)
.jpg)
