Landscape of independent schools in the UK likely to see significant shift amid VAT introduction, says latest Christie & Co report
Specialist business property adviser, Christie & Co, has today launched its Business Outlook 2025 report which reflects on the themes, activity and challenges of 2024 and forecasts what 2025 might bring across the sectors in which Christie & Co operates, including in the independent schools sector.
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Market overview
In 2024, there was significant disruption across the UK independent school market. While there was a fair amount of market activity including mergers and school ownership transitions, buyers, investors, and lenders evidenced heightened caution due to the lack of visibility following the announcement of the introduction of VAT on private school fees effective January 2025, loss of business rates relief effective April 2025, and latterly employers’ NIC increases. This led them to appraise new opportunities with a granular focus on pupil retention, new student recruitment, forward-looking operational costs, financial implications and sustainability.
Uncertainty in the market also resulted in opportunistic sector-agnostic interest from property developers and investors gathering pace amid the expectation of increased school closures, while international trade buyers focused interest on acquisitions in countries that award greater visibility and stability while continuing to be open to strategic mergers and takeovers in the UK.
Market uncertainty is likely to prevail in the short to medium term as the independent school sector and market adjust to these seismic policy changes. While some schools have well-established contingency plans in place, others, for a variety of reasons, have been less well-prepared and are much more likely to be impacted by the changes.
As of 2023/24, there were 2,421 independent schools in England, 90 in Scotland, 83 in Wales, and 13 in Northern Ireland. However, Christie & Co expects this will change given recent and impending challenges in the sector.
Market sentiment
As part of its annual sentiment survey, the company surveyed childcare and education service providers across the country to gather their views on the year ahead. When asked about their sentiment in 2025, 29 per cent said they feel positive and 31 per cent feel negative, while the majority (40 per cent) remain neutral which illustrates the uncertainty that remains. When asked about their sale and acquisition plans, 62 per cent stated that they are looking to buy and/or sell this year.
Market predictions
In 2025, Christie & Co expects:
- Increased merger and acquisition activity
- Schools able to act nimbly in diversifying to create new, additional revenues will do so
- Pupil numbers will be impacted by the introduction of VAT on fees
- For some schools, operational cost pressures will lead to financial distress and an increase in closures
- In the event of school closures, assets will swiftly be acquired by SEND education providers or for alternative use
Richard Green, Director and Lead Valuer for Childcare and Education at Christie & Co, comments, “2025 will, no doubt, be a challenging year for independent school operators across the UK and it will be interesting to see how the market adapts to the implementation of VAT coupled with the rise in National Insurance contributions and rising wage costs. For those businesses that are unfortunately forced to close, competitive tension will prevail, especially from buyers within the specialist education and children’s social care sectors where demand for services continues to rise and suitable properties for SEND education, and children’s social care services remain in short supply.”
To read the full business outlook report, visit: https://www.christie.com/news-resources/business-outlook-2025/childcare/
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For further information on this press release, contact:
Phoebe Hill, Associate Director – Corporate Communications
P: 07540 063 598 or E: phoebe.hill@christie.com