The School Leader’s Guide to Hidden Costs

In-House vs Outsourced School Lettings Company

For many schools and Multi-Academy Trusts, opening facilities to the community genuinely can be a “win-win”, strengthening community relationships while generating additional income. However, without a clear understanding of the true operational overheads, what looks like surplus revenue on a spreadsheet can quickly become a hidden financial drain. As school budgets tighten and operational pressures increase, the Department for Education (DfE) encourages schools to maximise the use of their assets. But doing this sustainably requires moving beyond top-line income and focusing on true Return on Investment (ROI). You need to account for the full operational cost of running lettings, not just the hire fees, when deciding whether to manage everything in-house or via a professional school lettings company.

What are the hidden costs of school lettings?

Hidden costs are the unseen expenses that eat into a school’s rental income, such as the time staff spend managing bookings, additional cleaning, extra utility bills, booking system fees and maintenance for wear-and-tear. For many schools, these overheads mean that what looks like profit is actually a loss. Identifying these costs helps schools determine whether outsourced school lettings are a more cost-effective way to secure a reliable share of monthly income, without the burden of staffing expenses, compliance management, and operational risk.

The True Cost Formula: Is Your School Making a Profit?

In our experience working with hundreds of UK schools since 2011, we’ve found that almost 80% of the schools we speak to managing lettings in-house are either making a loss or generating less than 10% profit.

The DfE’s ‘Advice on Charging for School Facilities’ makes it clear: schools should not subsidise community use from their core educational budget. In our conversations with School Finance Managers, we often discover that sports facilities are inadvertently being subsidised by other funds due to site assistant overtime and the costs of replacing equipment quietly outpacing hire income.

When calculating your ROI, you must account for the following four pillars:

1. Staffing and Administrative Resource

Managing enquiries, vetting hirers, and chasing late payments isn’t free time. If your School Business Manager earning £40,000/year spends just 5 hours a week on lettings, that represents an annual cost of roughly £5,300- and that doesn’t account for the expensive overtime costs many schools face for site teams, which we have seen reach over £40 per hour in some regions.

2. Balancing Usage with Maintenance 

High-traffic community use is a sign of a successful school hub, but it does require a proactive approach to maintenance. Rather than letting wear-and-tear become a burden, a managed service ensures your hire rates and utilisation are high enough to build a surplus in income. This means the community is essentially ‘paying forward’ for the facilities they love, allowing you to keep your halls and pitches in top-tier condition for your students during the school day.

3. The Energy Gap

It is a common misconception that hiring out a hall for £30 per hour is pure profit. In reality, heating a large Victorian hall or powering 3G floodlights can cost significantly more than the booking fee if rates don’t take into account the latest energy tariffs. Without a data-driven pricing strategy, schools often find they are effectively subsidising external groups. A well managed service eliminates this energy gap by ensuring hire rates are mutually beneficial; affordable for the community but enough to cover utility costs. 

4. Booking Systems and Marketing Spend

To scale a lettings programme, schools often face the cost of specialised booking software, which can carry hefty annual fees, and the digital marketing spend required to actually find new hirers. Without a professional marketing strategy, facilities often sit empty and there becomes a heavy reliance on one hirer, which is the highest hidden cost of all, especially if they cancel future bookings. Partnering with a fully managed lettings provider removes the overheads as they provide the high-end booking technology and handle the localised marketing campaigns (SEO, social media, and community outreach) at their own expense, ensuring your facilities stay busy and your revenue remains consistent.

How to audit your ROI:

If your current lettings programme isn’t delivering a true profit, consider these three steps:

1. Audit the Hours: Track exactly how much time your SLT and site teams spend on out-of-hours coordination.
2. Benchmark Your Rates: Ensure your hire fee cover the full cost of the building being open, not just the market rate, without outpricing your hirers of course!
3. Evaluate the Managed Model: Compare your net profit (after all hidden costs) against the projected income from working with a school lettings company.

In-house lettings can be an effective model in certain contexts, particularly where facilities are limited in scope or community usage is stable and long-term. However, the operational efficiency, marketing expertise, and scale of a specialist school lettings company often delivers higher net income than in-house management due to having greater long-term sustainability and growth.

The most sustainable model ultimately depends on your own context, capacity, and objectives as a school.

Frequently Asked Questions (FAQ)

The author

School Space

Lauren is a Marketing Manager in the Ed Tech space, passionate about driving meaningful change in the education sector. Currently working with School Space: Social Enterprise and Lettings Provider, helping schools generate vital additional funding while strengthening their role as diverse community hubs.

http://www.discover.school-space.org