Finance Leasing for School Outdoor Structures: What Changed in September 2024

There is a change to school finance rules that came in September 2024 and I am still surprised how many school business managers have not heard about it.

Previously, any school or academy in England wanting to use a finance lease for a capital project needed approval from the Secretary of State for Education. The paperwork was significant, the process was slow, and the reality was that most schools simply did not pursue leasing as a route. They either waited for the budget or went without.

In September 2024, that requirement was removed.

Schools and academies can now arrange finance leases directly with providers without going through the Secretary of State approval process. That is a meaningful practical change.

What is a finance lease?

For anyone who has not used one before: a finance lease is an arrangement where a leasing provider finances the cost of an asset, you make regular payments over an agreed term, and at the end you own the asset outright.

It is different from an operating lease, where you essentially rent the asset and return it at the end. With a finance lease, the intention from the start is that you own the covered walkway, canopy or other structure when the final payment is made.

For a school covered walkway, the arrangement typically works like this:

You agree the specification and price with the manufacturer. The leasing provider pays the manufacturer in full. The walkway is installed and you start using it immediately. You make fixed payments, usually monthly or termly, over three to seven years. You own the structure outright at the end of the term with no final balloon payment.

Why the pre-2024 rules made leasing so difficult

The requirement to get Secretary of State approval was introduced to give the DfE oversight of schools' off-balance-sheet commitments. The concern was that schools could build up significant lease obligations without these being visible in their accounts.

What it meant in practice was that any school wanting to use a finance lease had to submit a detailed application, wait for a decision, and then engage with the lease provider. Most schools looked at the process and decided it was not worth it for a £20,000 to £40,000 project. The cost of administering the approval often approached the cost benefit of spreading payments.

From September 2024, that hurdle is gone. The DfE still expects schools to manage their finances responsibly and account for leases properly, but the pre-approval requirement has been removed.

How does this affect a covered walkway project?

It makes leasing a realistic option where it previously was not.

If your school has a covered walkway project that is a clear priority but capital is not available or is committed to other urgent works, a finance lease now lets you proceed without waiting for a grant cycle or the next capital budget round.

Here is a practical example. A primary school with a 20-metre covered walkway costing £28,000.

Purchase outright: £28,000 capital required now.

Finance lease over 5 years: approximately £520 to £580 per month depending on the rate and provider. That comes from revenue rather than capital. For many schools, that is a much easier conversation with governors than a £28,000 capital approval.

The total cost over five years will be higher than the purchase price, typically by 8 to 15% depending on the interest rate agreed. That is the cost of spreading the payments. Whether it is worth it depends entirely on whether the project would otherwise not happen.

What should I look for in a lease agreement?

A few things matter.

Ownership at end of term. Make sure the agreement specifies outright ownership with no final option fee. Some leases have a nominal final payment, which is fine. Watch out for anything that requires a significant final payment to exercise the ownership option.

Fixed payments. Variable rate leases exist. Fixed rate is preferable for schools with tight budgets because you know exactly what you are committing to for the full term.

No early repayment penalty, or a reasonable one. If your school circumstances change, you want the option to settle early without punishing charges.

VAT treatment. Finance lease payments are usually subject to VAT. Academies can reclaim VAT, so this is less of an issue for academies than for maintained schools. Confirm the VAT position with your finance team before signing.

Asset ownership during the lease. During a finance lease, the lessee (the school) carries the asset on its balance sheet. This is different from an operating lease. Make sure your SBM or finance officer is comfortable with how this is treated in the school's accounts.

Does the school governance process change?

No. Removing the Secretary of State approval does not remove your school's own governance requirements. A finance lease commitment over a certain value will still need governor or trustee approval, depending on your scheme of delegation.

For most schools, a five-year finance lease for a capital project in the £15,000 to £50,000 range will need to go to the finance committee or full governing body. Your SBM should check the scheme of delegation and ensure the right approval is obtained before committing.

The key change is that there is no longer a national-level application process sitting above your own governance. That is the bit that was causing the delay.

Finance leasing alongside SCA or CIF

Leasing does not have to be the only funding route. Some schools use a combination: SCA contribution towards a larger project with a lease covering the remainder, or PTA fundraising contributing to the first year of lease payments.

If you are in the middle of a CIF application cycle and the outcome is uncertain, a lease also means you do not have to wait to find out. You can proceed on the basis that the project is viable on leasing terms, and if a grant comes through, use it to settle the lease early.

The practical takeaway

If you have a covered walkway on your capital wish list that keeps getting deferred because the capital is not available, the September 2024 change is worth revisiting. The barrier that made leasing impractical for most schools has been removed.

Talk to your finance team, get a specification and quote, and run the numbers on a five-year lease. For most walkway projects, the monthly payment is comparable to costs that schools approve routinely.

We provide full specifications, drawings and quotes as part of a free site survey. Call us on 01704 547 321 or request a survey online and we can have everything you need within two weeks.

For the complete picture on all school funding routes, read our full guide: How Schools Fund a Covered Walkway: DfE Grants, SCA and All Your Options Explained.