Special report: Property market predictions for 2025 INDEPENDENT SCHOOLS

  • 23rd January 2025

In this special report experts from leading UK property consultants reveal their predictions for the independent school real estate sector in 2025

Avondale Preparatory School in Salisbury, Wiltshire, was sold to EduPartners in May 2024, one of a number of transactions completed in the last 12 months

Market uncertainty results in interest from property developers and investors as 62% of providers say they are looking to buy and/or sell this year

 

RICHARD GREEN, director and lead valuer for childcare and education at Christie & Co

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.

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.

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

As part of its Business Outlook 2025 annual sentiment survey, Christie & Co 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% said they feel positive and 31% feel negative, while the majority (40%) remain neutral, which illustrates the uncertainty that remains.

When asked about their sale and acquisition plans, 62% stated that they are looking to buy and/or sell this year.

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

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.

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