Business Outlook 2025 | SEND Schools

As of January 2024, there were over 1.6 million school pupils in England with identified SEND and the number of children and young people with EHC plans increased to over 575,000, a rise of 11.4% from 2023. Additionally, the proportion of pupils receiving SEND support without an EHC plan rose to 13.6% in 2024, up from 13% in 2023. This increase will likely lead to more initial requests for EHC plans and a subsequent rise in the number of EHC plans issued.

This marked a continued rise in the proportion of pupils with SEND, reflecting the growing recognition and diagnosis of special educational needs. As such, the sector saw significant demand for properties suitable for SEND school provision, with interest from existing operators looking to expand and new entrants aiming to address the growing need for SEND placements and services. Buyers were particularly interested in vacant former school sites but also considered former hotels, care homes, and community assets like libraries.

A key major transaction in the sector last year was announced in May 2024. Cap10 Partners partnered with the existing Compass management to acquire 100% of Compass Community Children’s Services (Compass) - a leading UK provider of therapeutic fostering, residential, and special education for children with high acuity and complex needs – from majority shareholder, Graphite Capital. This significant transaction spanned two key childcare and education markets, notably the children’s social care and SEND education sectors, in which opportunities to acquire such operational business portfolios have been few and far between in recent years, creating intense competition between buyers. In the five months following the announcement of this transaction, Graphite Capital, in partnership with Storal, completed the notable acquisition of Children 1st Nurseries, thus further building their appetite and enthusiasm to support growth and investment in the UK’s childcare and education sectors. 

While the market has been fuelled by operators seeking assets suitable for SEND use, the sector is not immune to challenges:

• Local authorities continued to sign up for Safety Valve agreements, receiving extra government funding to manage high-needs SEND funding as required by the Department for Education. These agreements aimed to reduce inappropriate referrals and Education, Health and Care Plans (EHCPs) awarded, and to transfer children with EHCPs into mainstream schools. However, some councils face legal challenges over these agreements, with a number of judicial reviews commissioned.
• The Autumn Budget 2024 included a £1 billion uplift in funding for SEND as part of a broader £2.3 billion increase in the core schools’ budget. This funding aimed to support the reform of the SEND system and improve outcomes for vulnerable children. Despite this, there have been concerns about the sufficiency and allocation of funds, with advocates calling for more capital to ensure every child can access the education they need.

The SEND school sector in 2024 was characterised by significant demand for suitable properties, ongoing growth in state school-based provision, substantial government funding initiatives, and a rising number of pupils requiring special educational support. Despite challenges, the sector continues to attract significant interest from investors and developers, as well as those dedicated to expanding and enhancing services to meet the needs of all children with SEND.

Source: Gov.uk- Education, Health and Care plans, June 2024

The demand for SEND services continues to rise at pace. In 2023, 84,428 new EHC plans were initiated, marking a 27% rise from 2022. This brought the total number of EHC plans in England to 575,963 by January 2024.

Source: Gov.uk- Education, Health and Care plans, June 2024

The proportion of pupils receiving SEND support without an EHC plan rose to 13.6% in 2024, up from 13% in 2023. This increase will likely lead to more initial requests for EHC plans and a subsequent rise in the number of EHC plans issued.

• Owners exiting the market will achieve premiums, driven by competitive buyer tension
• Demand for properties with vacant possession will continue to facilitate new capacity creation
• Local authority budget pressures will increase the focus on providers demonstrating value for money
• Infrastructure property funds will show additional interest in assets occupied by SEND providers
• Regulatory scrutiny will intensify