Strong demand and strategic shifts continue to shape the children’s social care market

THE WIDER CHILDCARE & EDUCATION MARKETS

In the first six months of 2025, the UK childcare and education markets demonstrated strength and resilience, with robust buyer demand matching a growing supply of businesses coming to market. A diverse and active buyer pool - including individual investors, institutional funds, and charitable organisations - is driving acquisition activity, often with a focus on aligning investments with ESG goals.

The anticipated rise in Business Asset Disposal Relief from 10 per cent to 18 per cent in April 2026 is prompting many owners to consider their exit strategies, contributing to buoyant market conditions. Despite operational pressures such as rising National Insurance Contributions and wage increases, many businesses are adapting successfully, though fee sensitivity remains a challenge in some sectors.

Encouraging macroeconomic indicators, such as 0.7 per cent GDP growth in Q1 2025 and inflation easing to 2.8 per cent, indicated improving financial conditions and continued market confidence. While Consumer Price Index inflation increased to 3.4 per cent in May, it is expected to remain around this level for some time. Stable interest rates and the potential for future cuts could further stimulate development and acquisition activity.

CHILDREN’S SOCIAL CARE MARKET

The children’s social care property market remains robust, with properties benefiting from C2 or C2a use commanding premiums over those with standard residential (C3) use. This trend is driven by sustained demand from local authority commissioning teams and providers expanding services to keep children within their communities.

In Wales, the Health and Social Care Act - now law - makes it the first UK nation to ban profit in fostering and children’s residential care services. This legislative shift is prompting providers to restructure, with many seeking expert guidance to navigate the transition.

Despite a quieter first half of 2025, Christie & Co saw a surge in children’s care business owners actively reviewing their preparedness for sale, focusing on legal, financial, and operational considerations, through the eyes of alternative operators, buyers, and investors. Buyer interest remains strong, particularly for high-quality, established providers in England, with many entrants motivated by a genuine commitment to improving outcomes for children and young people.

THE FINANCE LANDSCAPE

According to Christie Finance, the lending appetite for the UK childcare and education sector remains strong, underpinned by favourable economic conditions, stable interest rates, and supportive government policies. The broker also noted that lenders are showing a growing interest in supporting businesses that contribute positively to society. The childcare and education sectors align well with the priorities of ethical investors and lenders who are actively seeking purpose-led businesses.

Julie Kitson, Director at Christie & Co, comments, “Despite the ever-changing landscape within this sector, the demand for quality businesses remains strong.  Although appetite continues to be focused on education for corporate operators, mid-range buyers are still looking for children’s homes with a ‘Good’ OFSTED rating and well-managed homes. Emphasis on good outcomes for children is still paramount, with thoughts on retaining children beyond 16 years plus. We continue to work with operators looking to expand their portfolios, and expect this to continue well into 2026.”

For the full ’Childcare & Education Market Review 2025’ which also includes a Q&A with Daniel Goodman, Head of Developments at The Harkalm Group, visit: https://www.christie.com/sectors/childcare-education/childcare-and-education-market-review-2025/

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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

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