Appetite for specialist childcare and children’s homes grows as the need for services intensifies, says Christie & Co

Demand for children’s services continues to rise, especially in the North, Midlands, London and the South East.   

Christie & Co notes that it is also seeing an increase in children with much higher complexities who require specialist one-to-one care and staff with targeted training to sufficiently support them – staffing recruitment and retention is a challenge faced throughout the sector, adding an additional layer of complexity. There are only 13 secure units in the country, and demand is increasing for these services – where children with exceptionally high complex needs require support - to a point where demand is higher than it’s ever been.  

Therefore, as the need for such services continues to rise, so does the demand from buyers for established operational businesses, which continues to outstrip supply, resulting in premium prices for business owners looking to sell, says Christie & Co. According to Ofsted data, from 31 March 2022 to 31 March 2023, there was a 9 per cent increase in the number of children’s homes in the UK, moving from 2,642 to 2,880, and a 7 per cent increase in the number of places, to 10,818. Also, as of 31 March 2023, private companies ran 85 per cent of children’s homes (2,450), providing 8,791 places, and Local Authorities owned just 12 per cent (333), providing 1,529 places. 

Operational portfolio reviews undertaken by many corporate groups have led to a surge in new opportunities so far this year, with Christie & Co being instructed to sell a significant number of closed children’s homes that no longer fit corporate operators’ strategic plans. These properties present a great opportunity for existing children’s home operators or new entrants. Many existing operators are finding it hard to expand by acquiring existing profitable companies and are therefore keen to acquire properties with C2 or CLD planning.  

Key deals in the first half of the year included the sale of three homes in Birmingham trading as part of Aston Children’s Care Holdings which sold to Resicare Alliance Ltd, and the disposal of five closed children’s homes across Stoke-on-Trent, Bedford and Spalding for Esland Care, all of which were transferred to existing children’s homes operators.  

Funding landscape 

Christie Finance notes the Bank of England base rate increase by 3.75 per cent in the last 12 months (1.25 per cent in June 2022 to 5 per cent in June 2023) has created unrest amongst buyers and operators alike and affordability for first-time buyers has been reduced, with operators working on lower profit margins due to higher debt service costs. 

Julie Kitson, Director at Christie & Co, comments, “It is inevitable that the demand will continue to outstrip supply in what is an ever-popular sector. The upcoming changes in unregulated businesses to become regulated will ensure all children’s services will be regulated and that children have the highest quality of care. Complex care, semi-secure, and foster care will also feature more in the coming years.” 

For the full Childcare & Education: Mid-Year Review 2023 report, visit: https://www.christie.com/childcare-education-mid-year-review-23/ 

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For further information on this press release, contact: 
Phoebe Burrows, Corporate Communications Manager 
P: 07540 063 598 or E: phoebe.burrows@christie.com 

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