London may be the largest childcare market in Europe, but it’s far from consistent. Factors like birth rates, local incomes, public funding, and planning rules vary hugely between boroughs and these differences have a direct impact on nursery demand, fee potential, and planning success.
Choosing the right location for your nursery isn’t just helpful, it’s often the deciding factor between a thriving setting and one that struggles to fill spaces.
What Drives Demand Varies by Borough
Although birth rates are generally falling across the city, the pace and impact differ in various boroughs.
But it’s not just about population size. Buyers looking at areas to start their new nursery should also look at the number of under-fives in an area, the rate of take-up for funded childcare hours, and how many families are in work locally.
In some boroughs, most eligible children already use formal childcare, meaning there’s little room for new providers to grow. In others, the number of places doesn’t come close to meeting demand. That can mean plenty of opportunity, but also challenges, especially in recruiting qualified staff.
Know Where Other Nurseries are Located
In London, parents don’t tend to travel far for nursery drop-offs, so nearby competition matters. Using tools like the Ofsted/ONS childcare map, property buyers can spot low-supply areas, even down to the ward level.
In some zones, low availability means you can charge stronger fees if the local income levels are high enough to sustain them. On the other hand, some central locations around major train stations already host multiple chains, making occupancy rates harder to predict.
Fee-setting is also closely tied to local supply. While average weekly nursery prices in inner London are well above the national average, too much competition in high-income areas can push those fees back down.
Access and Transport Count More Than Postcode
Most families are looking for convenience. Nurseries within walking distance of stations tend to fill faster especially in commuter-heavy areas.
In areas where public transport is limited, other features come into play. On-site parking or a clear “kiss-and-drop” zone can make all the difference.
Access problems don’t just put families off, they can also lead to planning restrictions, including limits on your opening hours so ask your agent to talk you through access and transport options when viewing potential buildings.
Local Authority and Ofsted Support
All boroughs are responsible for making sure there’s enough childcare, but their approach can differ. Some councils are more hands-on and even help introduce new providers to landlords. Others are already struggling with staffing shortages and may be more cautious about new approvals.
Speaking to the borough’s Early Years team early in the process can reveal any issues, or highlight grant schemes and local support that wouldn’t otherwise come up.
While Ofsted uses a national framework, past inspection results in the area still matter. Parents look at these when deciding where to enrol. Mapping nearby inspection outcomes can give buyers a sense of what marketing effort or fee limits might be expected.
Property Suitability and Planning Constraints
Use Class and Permissions
Day nurseries now fall under Class E, which allows more flexibility when converting shops or offices, provided there are no restrictions attached. Even so, it’s a good idea to apply for a Certificate of Lawfulness to avoid confusion later. Buyers also need to be prepared to justify the need for a new setting.
Space and Outdoor Areas
Nursery layout rules set minimum indoor space per child, which can be a problem in some Central London buildings. A new consultation may allow outdoor space to count toward these figures but that change hasn’t been confirmed yet.
Freehold vs Leasehold
Buying freehold in central areas of London is often costly and rare. Long leases can be more practical, but they may limit your flexibility if demand shifts. In outer boroughs, you’re more likely to find freeholds at manageable prices, with space to grow or add outdoor play areas, which could be useful down the line.
Buying a nursery in London means balancing multiple factors but location is one of the most impactful on the success of the nursery as a business. Population patterns, local competition, transport links, council attitudes, and building constraints all shape whether a setting will thrive.
If you’re considering entering this market, take the time to:
- Walk the routes parents would use
- Map existing nursery providers and Ofsted grades
- Speak to borough Early Years teams before you commit
- Compare the space and layout needs to what’s available
- Check planning and access concerns early