Independent and SEND school markets continue to navigate policy shifts and financial pressures

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.

INDEPENDENT AND SEND SCHOOLS MARKETS

The UK’s independent and special educational needs and disabilities (SEND) school sectors are undergoing significant changes in 2025, driven by new government policies and evolving market dynamics.

From January 2025, the introduction of VAT on private school fees has created uncertainty across the independent school market. A recent High Court ruling upheld the Government’s decision, prompting schools to reassess financial models and trading strategies. Rising operational costs - including increased pension contributions, energy bills, and National Insurance contributions - have further strained profitability, leading to a wave of school closures and consolidations.

Despite these challenges, schools that have proactively adapted through fee subsidies, site consolidation, and enhanced marketing remain attractive to buyers. Sales activity has focused on smaller schools, with strong interest from SEND providers repurposing sites for specialist education.

Meanwhile, the SEND sector continues to show resilience and growth. Demand remains high, supported by political focus and investor appetite. The Children’s Wellbeing and Schools Bill and anticipated reforms to the SEND funding framework are expected to shape future operations, and while government investment aims to expand SEND provision in mainstream schools, private sector involvement remains critical, particularly for high-needs services.

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.

Commenting on the independent school market, Richard Green, Director & Lead Valuer at Christie & Co, said, “We anticipate that as the second half of 2025 unfolds more vacant schools are likely to come to the market and, from a trading perspective, all eyes will be on pupil numbers, trading performance, and emerging opportunities across both independent and SEND education landscapes.”

Commenting on the SEND school market, Hannah Haines, Head of Healthcare Consultancy, said, “Despite political scrutiny, we expect the sector to continue to grow, with significant appetite for vacant properties to be repurposed into SEND schools, including former hotels, care homes, nurseries, and independent schools. With construction costs stabilising and base rate reducing, development activity may become more prevalent.”

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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