Changes to Leasing Agreements – Academy Trusts

On 28 March 2024, the Department for Education released new guidance aimed at giving academy trusts much more flexibility. From 1 September 2024, trusts will be able to enter into certain finance leases without needing prior approval from the Secretary of State for Education.

In the past, academy trusts always had to seek consent before borrowing. But now, there’s a set list of pre-approved finance lease arrangements, which means no more jumping through hoops or dealing with extra admin. This change should make it easier for trusts to enter into sensible financial arrangements without unnecessary delays.

For accounting purposes, trusts will still need to figure out whether a lease is considered “operating” or “finance” (since finance leases count as borrowing), and this will continue to be important for financial reporting.

While this new guidance lightens the load on some approvals, academy trusts still need to ensure they’re getting good value for money. That means carefully evaluating all the costs involved in any lease agreement—sometimes it might even be worth comparing the cost of leasing to simply buying outright, if reserves allow.