This follows earlier findings in 2024 that 80% of settings owned by the largest 10 groups were leasehold, indicating that the leasehold model is now well-established across the sector, particularly among the fastest-growing operators.

The research conducted by the international real estate advisor examines portfolio tenure across the UK‘s largest nursery operators. London and the South East continue to dominate the leasehold model by number of settings, with 77% of settings held leasehold, reflecting the elevated capital values that make freehold acquisition less viable for operators. By contrast, Wales and the North display the highest proportions of freehold holdings, consistent with lower property costs in those markets. The tenure data also highlights a strong geographic concentration of group-owned provision, with 65% of major group settings located in London, the South East and the North West, while the North East represents less than 2% of the national portfolio.

Jennifer Gill, Director in Leisure and Trading at Savills, comments: “Leasehold structures are playing a crucial role in enabling rapid growth within the nursery sector. By unlocking access to capital that would otherwise be tied up in property assets, operators are better equipped to meet demand, expanding their portfolios without the need to secure the funding typically associated with purchasing freehold properties.”

Over the past five years, starting rents in London and the South East have risen by 47% on a £/sq. ft. basis, with the most substantial growth (18%) occurring between 2023 and 2024. This surge is likely driven by heightened demand following the spring 2023 mini-budget announcement on the expansion of funded childcare.

Over the last 12 months, mergers and acquisitions of quality settings have continued, despite the market still being largely made up of independent operators. Busy Bees and Bright Horizons remain the UK‘s largest ‘super’ groups by number of places and settings.

Kids Planet retains its position as the third largest operator, following its acquisition of eight Perfect Start Nurseries across Surrey, West Sussex and Kent in March 2025. This deal took the group to 233 settings and expanded its coverage into a new geographical market. If its pattern of growth and retraction continues, Savills says that in 2026 the UK’s top two operators could change for the first time in over a decade.

Mid-tier groups with 10–20 settings have also expanded, according to Savills, focusing on organic growth and strong brand positioning. In January 2025, Kinderzimmer, a group of nine nurseries in London and the South East, secured investment backing from Tibeca21 to support further expansion. Similarly, Fennies, with 20 sites, secured a £45 million investment from Mantra Capital to fund the opening of 10 new settings between 2025 and 2026 across the south of England.

Jennifer Gill continues: “We’re seeing further shifts in holding structures that are driving consolidation, with more nursery groups embracing a predominantly leasehold model. While leasehold arrangements support faster growth, operators still benefit from maintaining some freehold holdings to strengthen balance sheets and underpin long-term resilience. Many of the largest operators have already pursued sale and leaseback transactions for elements of their estates, and we expect demand for these deals to continue in the coming years.”

Looking ahead, headwinds continue to challenge the sector, and adaptability will be paramount to advancing early-years education provision, according to Savills. However, continued acquisition and investment activity suggests strong liquidity in the market, driving further growth and consolidation. Leasehold settings will remain central to this trend, providing operators with growth opportunities without locking away significant capital in property assets.