The UK’s ageing population and rising demand for residential care make the sector a compelling opportunity to acquire a care home.
However, purchasing and operating a care home is not a straightforward financial venture – it requires a deep understanding of regulatory compliance, market conditions, and operational demands. So, is buying in a care home a smart move? Let’s explore the key factors.
Growing Demand & Dwindling Supply for Care Homes
The demand for care home services is steadily increasing, driven by an ageing population. The 7.1% compound annual growth rate (CAGR) in the care homes sector for the period of 2025 to 2035, demonstrates a resilient market despite global and national growth fears.
According to research by Care Management Matters, there will be a shortfall of 58,000 beds by 2035.
This steady increase in demand but supply constraints mean that buying a care home now could be lucrative.
Shifting Demographics
Within the 65+ care home population, 56.4% were aged 85 years and over in 2021, down from 59.2% in 2011, according to the Office for National Statistics (ONS). There is also a shift in the type of care provided, with an increasing proportion of care home residents living in homes with nursing.
The sector remains diverse, with growing ethnic representation among care home residents and increasing regional variations. The North East and North West had the highest proportions of the population aged 65+ in care homes, at 2.9% and 2.8%, respectively, according to the ONS.
Large Labour Pool of Care Homes Workforce
It is estimated that the care homes workforce stands at ~750,000 people, which is just over 2% of the UK’s working age population.
However, this is not the total figure of available talent, as the total estimated number of filled posts in all adult social care is estimated at 1.7 million. Whilst this figure also includes posts in home care positions, many employee will be trained to the same standard and very familiar with the compliance needs of care homes.
Despite the large pool of potential workers, hiring staff can still be challenging. This has become even more relevant with a recent update: from 9 April 2025, care providers looking to recruit workers from overseas must first demonstrate that they have made reasonable efforts to hire individuals already in England who require sponsorship.
The measure aims to support those who have already come to the UK to build careers in adult social care while reducing dependency on international recruitment and strengthening the domestic workforce. These changes form part of the broader government strategy to balance the care sector’s staffing needs with immigration policies.
Job roles are grouped into four broad categories:
- Supervisory & Management Roles – This includes registered managers, senior, middle, and frontline managers, team leaders, supervisors, deputy managers, and staff engaged in care-related tasks that do not involve direct care delivery.
- Specialist Care Professionals – Encompassing occupational therapists, social workers, allied health practitioners, safeguarding and reviewing officers, nursing associates, and registered nurses.
- Hands-on Care Roles – Covering care workers, senior care assistants, other roles dedicated to direct care provision, and community support and outreach staff (referred to as ‘support and outreach workers’ in this report).
- Support & Administrative Functions – Consisting of care coordinators, clerical and office personnel without caregiving duties, assessment officers, ancillary staff not involved in care, and activities organisers, as well as other non-care roles.
Care Home Regulatory & Compliance Factors
All care homes in England must be registered with the CQC, which regulates health and adult social care services. Compliance is a legal requirement, ensuring that residents receive safe and high-quality care.
In Wales, the Care Inspectorate Wales (CIW) is the authority supervising care homes, in Scotland, the authority is the Care Inspectorate (CI), with Northern Ireland’s Regulation and Quality Improvement Authority (RQIA) being the body responsible.
Failure to adhere to the regulatory bodies’ regulations can lead to various penalties, including fines, legal proceedings, and, in severe cases, custodial sentences, depending on the gravity and specifics of the breach.
Alongside CQC (or equivalent) registration, each home must employ a registered care manager with at least two years of senior care management experience and an NVQ Level 5 in Care and Management.
Strict regulations also govern space, accessibility, and safety features. Essential requirements include:
- Minimum room sizes and communal space
- Mobility access and safety features
- Fire safety and infection control measures
- Ensuite facilities and storage requirements
Care Home Profitability & Financial Considerations
Running a care home can be highly profitable, but success depends on several factors:
- Reputation & Quality of Care: A strong reputation, high-quality care, and positive authority (CQC/CIW/RQIA) ratings attract residents and maintain steady occupancy levels. Note that lenders also look at the ratings of the authorities when providing fixed rate loans.
- Occupancy Rates: A high occupancy rate generates a consistent revenue stream. Conducting market research to determine demand in your target location is essential.
- Fee Structure & Financial Performance: Reviewing financial statements and fee structures ensures the business is viable. In 2023, just under 50 per cent of residents in old age/elderly care homes were self-funders in the UK.
- Ongoing Investment Needs: Regular investments in staff training, facilities, and compliance are necessary to maintain high standards.
UK Government Support & NHS-Funded Nursing Care
Government funding for care homes can come from either local authorities or the NHS, depending on the individual’s circumstances. Local authorities may help cover care costs for those with less than the upper capital limit (currently £23,250 in England) in savings, provided their needs are assessed. The NHS, on the other hand, may fund nursing care directly to the care home or cover the cost of continuing healthcare for individuals with complex health needs.
Government backing for healthcare will continue in 2025, with an additional £880 million in grant funding allocated to bolster social care.
Although this funding is chiefly directed towards public health services, its impact is expected to extend across the sector by easing pressures on private providers and fostering greater collaboration between public and private healthcare organisations.
The government has announced a 7.7% funding increase for nursing care establishments, ensuring improved support for upwards of 75,000 people across communities. Care homes delivering bespoke health services, including medicine administration and vital medical interventions, will benefit from this enhanced financial allocation to strengthen personalised care provision
This cash injection aims to alleviate pressure on hospitals by reducing avoidable admissions and facilitating the timely discharge of patients into social care settings, thereby freeing up hospital capacity.
Market Demand & Location Strategy
Location plays a vital role in care home success. Areas with a growing elderly population and limited care home availability offer greater potential when buying a care home.
Specialised services, such as dementia care for instance, can differentiate a care home in the market where there is a shortfall in that geographical area.
Why Now, Why RDK
Buying a care home can be a rewarding investment, both financially and personally, with the right resources, expertise, and commitment to high-quality care. Buying a care home should be weighed on intrinsic value, ensuring long-term sustainability rather than short-term gains.
A specialist care home broker such as RDK will provide insights into prospective care homes, identify growth hotspots, and highlight areas where supply is constrained – helping you secure the best possible return on investment. We can work with you to identify suitable opportunities to support your acquisition strategy in the sector.
In 2024, RDK sold over £50 million total transactions value of healthcare businesses across the UK.
For expert guidance on buying or selling a care home, contact Redwoods Dowling Kerr, the UK’s leading boutique business broker, to explore your next opportunity.
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