Revenue from school land – alternatives to selling the family silver

The Age has reported that Preshil in Kew is selling a section of its campus to help meet its payroll tax bill and other liabilities. Numerous independent schools we advise in Victoria are grappling with how to cover their payroll tax bill from 1 July 2024, on top of already increased operation costs in this high inflation environment. Preshil will not be the only school looking at a land sale to free up some cash. But while a sale of school land is a quick way to get some money, once the land is sold a school loses the ability to grow its student numbers at that campus as much as it otherwise could have. This article considers some of the other things schools could do with their (currently) surplus land to generate money while preserving their future ability to develop and grow.

Lease land or spaces

If a school has unused land or space, selling is not the only way to put it to use. A lease can generate income while preserving the long-term options for the land. Long-term ground leases can work particularly well for vacant land with no foreseeable use for the school. A long-term ground lease can often justify a tenant undertaking building works, the cost of which can be amortised over a long period (typically 20+ years). A council, other education provider or retirement village operator may be happy to take a long-term lease and build a facility approved by the school. Following the expiry of the lease, the land and its improvements revert to the school for it to use as it sees fit.

Develop for lease

Some schools may consider improving their surplus property before leasing. This approach requires the school to spend in order to obtain a higher rent from a commercial tenant than it would under a ground lease referred to above where the tenant undertakes the works. These developments could be ones where the tenant gets exclusive possession or ones for joint use between the school and the tenant. Examples of joint use developments include facilities that can be used for weekend tuition or sport facilities hired to clubs or leagues. For schools that are cash poor, which many are in 2024, the significant upfront investment required may make this option unviable.

Sell the air rights

This scenario is worth considering where a property has potential for multi-level development. The basic concept is for the school to retain facilities (either existing facilities or new facilities) at ground level but sell the right to develop above those facilities. While this option does involve the loss of long-term development potential, a new school building at the bottom of a multi-level development may sufficiently future proof the school such that the air rights above that building will never be needed. There are a range of considerations around this option, starting with what use is a suitable ‘neighbour’ for the school and whether the school should take the role of being the developer and sourcing the finance. Some schools may prefer just to be the landowner with oversight and rights required to protect its interests.


This article outlines just three alternatives to selling school land. There are other alternatives, including combinations of the ones outlined above. This article has done its job if it encourages a school thinking of a land sale to consider options which better preserve the school’s ability to grow. While it can be difficult for schools to fully understand and explore their options when it comes to dealing with their land, a school should not sell the family silver before it has done so.

How we can help

Moores has a strong history of supporting the education sector, from independent and catholic schools, to early childhood providers, higher education and education governance and industry bodies.

We are more than happy to guide your school through the process of determining how to best utilise any surplus land.

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Disclaimer: This article provides general information only and is not intended to constitute legal advice. You should seek legal advice regarding the application of the law to you or your organisation.