Christie & Co,the property adviser’s Business Outlook 2025 report,is predicting increased merger and acquisition activity this year, as independent schools look to come to terms with the imposition of VAT on school fees and other new business taxes.
Richard Green, Director and Lead Valuer for Childcare and Education at Christie & Co, commented: “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 unfortunatelyforced 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.”
Other predictions for the year ahead by Christie & Coinclude:· Schools able to act nimbly in diversifying to create new, additional revenues will do so.· Pupil numbers will be impacted by the new taxes.· 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. The property adviser notes that there was significant disruption across the UK independent school market last year. 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.”
