Maintained School and Academies. A Guide to Leasing

You will be aware that an Operating Lease is the only type of lease a State Funded (Maintained or Academy) school can freely enter in to.

If a Maintained or Academy School wants a different type of borrowing, including Finance Leases Hire Purchase, Loans or even a simple Bank overdraft, it would need to get formal approval from the Secretary State for Education. And this is generally not something that gets approved.

As such, a Local Authority funded Maintained School or an Academy Trust will generally have the choice of purchasing outright or finding an Operating Lease.

What are the benefits of the two options?

Buying outright is a cost that is paid out usually on receipt (or order) of the goods. The equipment becomes yours and the liability for all maintenance, repairs etc. are down to you. When you want to upgrade it, you can choose how to dispose of the old equipment and when.

An Operating Lease is effectively a rental of the equipment. Usually over 2 to 60 months (though we have seen schools leasing modular classrooms over 10 years).

The equipment is not yours, potentially reducing the risks of ownership. The lease company set a 'residual value' for the end of the term when they take back ownership. At this point, they can either rent it out again or sell it. 

An Operating lease can work well for schools allowing the cost of usage to be spread (at a fixed cost) over the period the school wants the equipment for.

Choosing the right option for your school:

Ensure you get quotes for outright purchase and factor in any maintenance costs that ill be required over the period you will use the equipment.

Compare these to the Equipment supplier Operating Leasequote (they will almost certainly be selling the Operating Lease finance of a third party finance company).

Arrange for quotes from other Operating Lease providers to compare and evaluate best value.

You do NOT need to take your equipment supplier's leasing arrangements.

You Have a Choice.


Our research tells us that, if a school decides to fund using an Operating Lease, almost without fail, they will :

  1. Choose the suppliers funding solution

  2. Do not research other options

  3. Do not use a broker to help them source better terms.

Let's look at the alternative options and 'bust a few myths'

  • You DO NOT need to use your suppliers Operating Lease option. There is a good chance that you can achieve better rates for the operating lease (or finance lease if you are an Independent School) elsewhere but still get your equipment from the same supplier.

  • You absolutely should shop around. Rates and costs can vary significantly.

  • A Broker will shop around for you and they should not charge you for doing so (as the lease company will pay the Broker a commission much the same as the lease company pays your supplier a commission if they arrange the lease for you).

Now it's time for 'full disclosure' - 'Education Banking Consultancy' acts as an Appointed Introduce Representative of 'MediFinance Ltd.') This means that we can review the options for you, hopefully saving you money. It also allows you to consider financing the equipment on an operating lease over a longer term rather than paying outright (potentially allowing you to upgrade earlier or not needing to put off equipment upgrades).

Next time you are looking to upgrade equipment or add equipment, consider the following:

  • Can it be obtained on an 'Operating Lease' allowing you to spread costs? (remember that a state funded school can not use a finance lease. they need to use an Operating Lease if they are not buying outright)

  • What terms are the supplier offering you? (Get this in writing so you can compare)

  • What terms can you get elsewhere? (Ask us to find out for you!)

We specialise in Schools. We will be delighted to support you to get better value for money with your Operating Lease.

If you are not sure if the equipment you want to purchase can be obtained on an Operating Lease, ask us. We will be happy to explore for you.