SINGAPORE – Paying 40 percent more in monthly rent in 2023 is a relief for the Montessori Children’s House preschool, said its principal Carolyn Tan.

The preschool on Old Holland Road was initially told it would be increasing its rent by around 90 percent, but it managed to negotiate a reduction in the rent with the landlord.

Ms Tan said the sharp increase in 2023 came after rent was frozen during the Covid-19 pandemic. Over the past 35 years, rent for the preschool operator, which runs a centre with 42 children, had typically risen by 10 to 15 per cent every two years.

“We are at the mercy of our landlord. Changing location would mean a potential loss of customers. We cannot simply leave as most of our children live in this area,” said Ms Tan.

The Montessori Children’s House is one of several smaller preschools that have faced challenges in recent years due to higher rents and staff costs.

Seven of these operators – each with one to five preschool facilities – told The Straits Times that these challenges had only been exacerbated by post-pandemic rent increases.

They also continue to face strong competition from state-supported preschools – which offer teachers higher wages and lower fees – and larger commercial preschool chains.

Independent preschools, which typically charge more than $1,000 in monthly fees, are different from anchor and partner centers, which are funded by the government to ensure their fees remain affordable. Full-day childcare fees are capped at $680 at anchor-operated centers and $720 at partner centers, and will continue to fall in 2025. Some parents have therefore sent their children to these centers.

According to the Early Childhood Development Agency (ECDA), more than six out of ten preschool children now attend state-funded preschools. In 2019, this figure was only half. By 2025, this proportion is expected to rise to eight out of ten children.

Rent increases

Rent for Blue Lion Preschool has risen by nearly 20 percent since it opened in the Siglap area four years ago. Principal Charmaine Teo said further increases could force the preschool, which teaches 21 children, to leave its current premises.

The preschool opened during the pandemic with just six children. It took more than a year for the number of students to grow to ten and another two years to reach 21 children in 2023.

To accommodate rising costs, the facility increased its fees in January and now charges $1,580 per month for full-day child care.

Even though it is becoming increasingly unprofitable to run small preschools, they are still important because they offer families the opportunity to have “a second home,” Teo said.

Responding to questions about the challenges facing independent preschools, an ECDA spokesperson said: “Non-anchor operators wishing to establish preschools must rent premises and negotiate rental prices directly with landlords, like any other business.”

“Operators may also participate in tenders for government sites, which are publicly advertised from time to time.”

The spokesman said the ECDA is working with the Housing Board to build new preschools in almost all HDB Build-To-Order projects where more families with young children live.

Most of these preschool locations are then contracted out to anchor operators to provide affordable, high-quality preschool services to families.