Autumn Budget fuels day nursery market activity, says Christie & Co

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 14 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.

UK CHILDREN’S DAY NURSERY MARKET

The first half of 2025 saw heightened activity in the day nursery market, as operators responded to recent government policy changes. This has created opportunities for both consolidation and strategic exits.

Buyer interest remains strong across all price points and business sizes, with demand for both leasehold settings (making up 53.2 per cent of deals in H1 2025) and freehold settings (making up 46.8 per cent of deals in H1 2025). Notable transactions include Kids Planet Day Nurseries’ acquisition of the Perfect Start Group, marking a strategic expansion into southern England.

Not too dissimilar to what was seen in 2024, the average capacity of day nurseries sold by Christie & Co so far in 2025 has ranged from an average of 49.8 places for independents to an average of 88.7 for corporate groups.

In the first half of 2025, there was a shift in the number of day nurseries purchased by different buyer groups. Appetite from the buyer group comprising independents and first-time buyers increased, making up 28.8 per cent of sales in H1 2025, compared with just 15.4 per cent in the same period in 2024. Similarly, Christie & Co saw a slight drop in corporate and large group activity, which made up 55.8 per cent of sales in H1 2025 compared with 70 per cent in H1 2024.

The common theme that has run through all day nursery sales in 2025 so far has been the competitive tension and heightened level of interest experienced across the board from a range of buyers.

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. A key driver is the upcoming policy change from September 2025, which will entitle all children in eligible working families to up to 30 hours of funded childcare per week from nine months old. This is expected to significantly boost demand across the sector. 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.

Nick Brown, Director & Head of Brokerage – Childcare & Education at Christie & Co, says, “As announced in Rachel Reeves’ 2024 Autumn Budget, increases in Business Asset Disposal Relief from 10 per cent to 14 per cent effective 6 April 2025, prompting more day nursery business owners to consider their exit strategies, has undoubtably contributed to 2025’s buoyant market conditions. Heightened activity in the sector is expected throughout the remainder of this year, and we anticipate an incredibly busy Q1 2026 as a result of the further BADR increases to 18 per cent effective 6 April 2026. Despite operational pressures, such as rising National Insurance contributions and wage increases, many businesses are adapting successfully, though fee sensitivity remains a challenge.”

For the full ’Childcare & Education Market Review 2025’ which also provides regional insights in local day nursery markets, and 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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