LONDON, UNITED KINGDOM--(Marketwired - Oct 9, 2013) - With competition for places in the most popular schools increasing*, new research1 from Nationwide Building Society shows that nearly a quarter (23 per cent) of UK parents of children aged 5 to 16 years would move and be prepared to pay between two and 10 per cent extra on the price of their new home to be in the catchment area of a better school. Nearly one in ten (eight per cent) would be prepared to pay more than 10 per cent extra for their house and eight per cent would pay anywhere up to an additional two per cent.
With the typical UK home currently worth £172,1272, this could lead to a substantial monetary outlay for parents at a time when household finances are already being squeezed. For example, parents willing to pay two per cent more would need to find nearly £3,500 extra. Anyone prepared to pay 10 per cent more would add an additional £17,213 to the cost of their new home.
|Price of typical UK home: £172,127²|
|% increase||New house price||School premium|
|2 per cent increase||£175,570||£3,443|
|5 per cent increase||£180,733||£8,606|
|10 per cent increase||£189,340||£17,213|
|12 per cent increase||£192,782||£20,655|
|15 per cent increase||£197,946||£25,819|
|20 per cent increase||£206,552||£34,425|
The additional cost of the house will also have implications on the cost of the mortgage. Paying an additional 10 per cent on the cost of a typical UK home (£172,127²) would mean buying a house worth £189,340.
Based on a 15 per cent deposit, a house worth an additional 10 per cent would require an extra £2,582 deposit and, if for example, Nationwide's five-year Flexclusive tracker mortgage*** was taken out, would also mean an extra £76.75 per month in mortgage repayments. So, in the course of the first year, parents would need to find an additional £3,503 and, over a five-year period, it would cost £7,187 extra.
Parents are already making house purchase choices based on schools. Our research shows that nearly one in five of parents (18 per cent) admit that a school league table or school Ofsted rating has influenced where they chose to live.
Richard Napier, Nationwide's divisional director for savings and mortgages, comments:
"Choosing the right school for your child is possibly one of the most important decisions a parent will make and it appears league tables and Ofsted reports play a significant part in that decision.
"Competition for places at the UK's best schools continues to increase and, although household finances remain stretched, it is significant that a number of parents are willing to pay more on the price of a new home to ensure their child goes to a good school.
"Taking the cost of a typical UK home, any parent willing to pay 10 per cent more would need to find an additional £17,000 on the total cost of the house, which is a lot of money in the current climate. And, this is before you factor in the cost of items such as uniform, P.E. kit, lunch and even travel to and from school.
"And with the additional monthly repayment on Nationwide's five-year Flexclusive tracker mortgage*** being an additional £76.75, it may well be a premium parents think is worth paying."
Notes to editors:
1 All figures, unless otherwise stated, are from YouGov plc. Total sample size was 1,012 UK parents of children aged 5-16 years whose child will be attending school in the next academic year. Fieldwork was undertaken between 7th - 13th August 2013. The survey was carried out online.
² Source: Nationwide September House Price Index http://www.nationwide.co.uk/NR/rdonlyres/19D2DA3F-08CB-4473-B53F-E339154B7F88/0/Sep_2013.pdf
** Deposit calculations
15% deposit on £172,127 = £25,819
15% deposit on £189,340 = £28,401
Deposit difference: £2,582
** Monthly repayment calculations
Property value: £172,127 / Loan: £146,308 / Term: 25 years / Mortgage: 5 year Flexclusive Tracker (Rate used: 3.94%)
Monthly repayment: £767.42
Property value: £189,340 / Loan: £160,939 / Term: 25 years / Mortgage: 5 year Flexclusive Tracker (Rate used: 3.94%)
Monthly repayment: £844.17
Monthly payment difference: £76.75
*** The mortgage product and monthly payments shown above are for illustration purposes only. They are based on a new customer moving house, the initial rate during the deal period and on a capital and interest repayment method. They do not take into account any fees or charges payable for changing the mortgage, or the applicable interest rate when the mortgage deal ends.
To get access to our range of Flexclusive offers you must either:
- Hold a FlexAccount with a Visa debit card (not cash card or cash card+) and:
- Have been paying in £750+ a month (excluding internal transfers) for the last 3 months; or
- Complete an account switch to us (from a non-Nationwide account) using our Current Account Switch Team or have done so in the last 4 months; or
- Hold a FlexDirect or FlexPlus account.
About Nationwide Building Society
Nationwide is the world's largest building society as well as the second largest savings provider and a top-three provider of mortgages in the UK. It is also a major provider of current accounts, credit cards, ISAs and personal loans. Nationwide has around 15 million members.
Customers can manage their finances in a branch, on the telephone, internet and post. The Society has around 15,000 employees. Nationwide's head office is in Swindon with administration centres based in Northampton, Bournemouth and Dunfermline. The Society also has a number of call centres across the UK.
Find recent press releases and photos at the Nationwide Media Centre: www.nationwide.co.uk/mediacentre