When it comes to selling or buying a day nursery, the terms of your property agreement can have a major impact on your business’s value – and on how smoothly a sale can progress.
One of the most common issues we see in the nursery market is around licences – particularly when nurseries are operating from scout huts, church halls, parish council buildings or school sites. Often these nurseries have been in the same premises for decades, yet on paper, they’re operating under a one-year rolling licence or a term-time agreement.
It may have worked perfectly well for years, but when it comes to selling, that kind of setup can cause serious complications.
Why Short Licences Cause Problems at Sale
From a seller’s perspective, it can seem simple:
“We’ve been here for thirty years – the landlord’s happy, and there’s no reason they’d want us to leave.”
But for a buyer (and more importantly, their lender), that lack of long-term security is a red flag. When someone is investing hundreds of thousands into buying a nursery, they need the confidence that they won’t lose the premises at short notice.
Lenders typically won’t support a purchase where there’s only a short-term or rolling licence in place. Without that security of tenure, finance becomes difficult to secure – and that can directly reduce what buyers are willing (or able) to pay for your nursery.
Why It Happens
In many cases, short licences exist simply because that’s how it’s always been done. Thirty years ago, a one-year rolling licence might have suited both parties perfectly. But the world has moved on – and your agreement should too.
Today, even local authorities, schools and parish councils are expected to be more financially self-sufficient. In most cases, they actually benefit from having a long-term, stable tenant with a formal lease in place.
What You Can Do About It
If you’re two to three years away from selling your nursery, now is the time to act.
- Start the conversation early.
If your premises are owned by a parish council, local authority or school, lease negotiations can take a long time — sometimes years. Start early to avoid delays when you’re ready to sell. - Propose a long-term lease.
If you’ve got a strong relationship with your landlord, suggest formalising it with a 10–15-year lease. It offers both of you more security and immediately strengthens the value of your business. - Understand your options.
If a long-term lease isn’t possible, you may need to consider relocating in order to achieve the best value for your nursery — or adjust your retirement or exit plans accordingly.
Real-World Example
At Owen Froebel, we’ve seen first-hand how this issue can affect a sale. In one recent case, a nursery owner had been negotiating a new lease for three years – and until that was finalised, buyers were unwilling to meet her valuation.
It’s a stark reminder that while you might be ready to sell, your landlord (especially if they’re a council or volunteer-run organisation) may not be moving at the same pace.
The Takeaway
Don’t assume that your current licence or lease is the only option available. A proactive conversation now could:
- Increase the sale value of your nursery
- Make your business more attractive to buyers and lenders
- Give you greater control over your exit strategy
If you’re not sure where to start, we can help you review your situation and plan ahead.
Thinking about selling your day nursery in the next few years?
A quick conversation today could add real value to your future sale.
📞 Get in touch with the Owen Froebel team for confidential advice and a no-obligation valuation.
