ESPC reveals how the addition of private school VAT has impacted demand for homes in top catchment areas

ESPC, the leading Scottish property portal, has revealed how much the application of VAT to private school fees has impacted Edinburgh’s property market, especially for homes in the catchment areas of top-ranking secondary schools.

VAT was applied to private school fees from 1 January 2025, and this change brought much discussion on whether families would be able to afford the higher rates (an average additional spend of £3,000 per child, per year), and a fear that this would result in huge pressure on state schools to accommodate children who would have previously been assigned to independent education.

Since the introduction, many parents across the country have swapped private education for top-ranking state equivalents, but in cities like Edinburgh, this can have a huge impact. With around 15 independent schools in the capital alone, droves of parents opting to send their children to state schools instead can quickly add up. Pressure on Edinburgh’s state schools is already high, and there is fierce competition for places at the highest-ranking ones especially, making it hard to buy homes in the associated catchment areas.

So, how has the impact of more expensive private education affected the cost of buying a property in the catchments for the top-ranking secondary schools – and has demand slowed for family homes close to Edinburgh’s private schools?

“The impact of higher private school fees hasn’t had the impact on the property market that many predicted it would, at least not in Edinburgh”, says ESPC CEO Paul Hilton. “Across the state school catchments, there is little evidence of a market-wide surge in demand following the VAT change, despite predictions to the contrary. However, several of Edinburgh’s highest-ranked school catchments, including Craigmount High School, James Gillespie’s, Portobello, Currie Community High and The Royal High School, have recorded positive growth in prices, sales activity or both, suggesting demand has been strongest in a select number of sought-after locations rather than across the market as a whole. This isn’t unsurprising, as we can assume that parents opting for independent education would be selective in their choices and would opt for the highest-ranking state alternatives available, which is certainly where we’ve seen some demand rising in the surrounding property markets.”

Specifically, Craigmount High School’s catchment area saw a 3.47% rise in average property prices during 1 January 2025-31 July 2026, while house prices in the catchment for James Gillespie’s rose 3.76% in the same period.

Buyers paid a premium for homes in the catchment of the top-ranking Boroughmuir High School, paying 103% of the Home Report valuation on average, while buyers in the catchment for Portobello and Currie Community High Schools were not far behind, paying 102.6% and 102.5% on average.

Unsurprisingly, homes in the catchment area for Boroughmuir were the highest priced, with average selling prices sitting at £381,589. By comparison, homes in the ESMS catchment were the most expensive of the independent homes sector, with an average price of £420,609, showing that property prices around these locations still often retain a higher value.

While private schools don’t usually operate within a strict catchment area (more a general radius), many people would naturally prefer that their children live close to the school they attend, so an estimated catchment radius has been defined for the purposes of this research. Since the introduction of VAT on private school fees, average sale prices across these suggested independent school catchments softened slightly, falling from approximately £396,500 during the period of 2022-2024, to £388,600 in the period since January 2025.

Paul Hilton comments further: “Sales activity across these independent school catchments has remained broadly stable overall, as we would expect, however, this varies between locations. Most notably, there was a significant slowdown around the ESMS catchments, where sales volumes fell by around 15-17% since 1 January 2025. However, homes around these schools retain the highest selling prices, suggesting that while demand may have softened marginally, homes in these prestigious locations still command a high value. Property prices in the areas around George Watson’s College and The Edinburgh Academy have remained comparatively resilient.”

“In conclusion,” Paul continues, “it’s difficult to say whether the VAT introduction specifically has caused a rise in property prices and premiums paid for homes in the top-ranking state school catchments, although it will almost certainly have contributed in some way. Edinburgh’s highest-performing state school catchments continue to command a substantial house price premium, especially for family-sized homes, where it looks as though buyers are willing to pay significantly more for access to highly regarded schools, and competition for places remains fierce.

“While the introduction of VAT on private school fees has coincided with some softening in areas around specific independent schools, this evidence doesn’t currently display a broad market shift away from private-school areas and into state school catchments. Instead, the impact appears localized, with demand remaining strongest in a relatively small number of Edinburgh’s most sought-after school catchments.”

For more information about ESPC, visit espc.com.