Buying a Care Home: Finance, Hurdles and Support

In the UK, property investors may not consider buying a care home. It’s a fairly niche sector, and the finance for it may not be there.

But, the outlook for this corner of the market looks promising, if challenging. If property investors buying a care home can crack the finance and admin involved, they could find themselves generating healthy yields and returns.

While nothing can be guaranteed in property investment, our changing demographics may lead to a dramatic uptick in interest.

Demand for Care Homes in the UK

Last year was actually a very good one for the care home industry. According to Christie & Co’s Business Outlook 2025 report[1], the majority of operators in 2024 reported improved occupancy levels, a reduction in agency usage, and a return in buyer confidence. This confidence resulted in an increase in transactional activity across the market.

Looking ahead, we may only see rises from here, alongside rising demand for funding to buy a care home. Our population is aging, and this is likely to increase the need for care homes. According to the ONS, the number of people at state pension age is projected to increase by 1.7 million to 13.7 million by mid-2032[2]. Also, our plunging birth rates[3] are aging us quicker, and exacerbating the issue.

Unfortunately, while 2024 showed a rebound, we still seem ill-prepared for what’s coming our way over the long-term. Within the next three years, the UK is estimated to have a senior housing shortfall of more than 30,000 units[4]. By 2035, we’re on track to have a shortfall of 58,000 beds across the care sector[5].

This is putting immense pressure on the underlying users and their families, who are desperate for more stock. As result of rising costs for care home providers, and a lack of options, families are being forced to spend £5,000 more a year in fees for their loved ones[6].

Challenges Remain

Demand, and a need for care homes is clearly there. And despite the UK falling behind on supply, private investors are playing their part in trying to narrow the gap. In 2024, there were £3.1 billion worth of care home deals in the UK, according to Cushman & Wakefield[7]. Interestingly, this sector appears to be drawing appeal from overseas, with American backers accounting for 56% of these acquisitions.

Yet, for property investors who may want to invest in this market in 2025, a few notable challenges remain. Generally, the sector is in desperate need of reform. On top of facing rising operating and tax costs, the sector has seen the government delay its reform plans following the launch of an independent commission to look into fixing the system that will not conclude until 2028[8].

All told, Nuffield Trust[9] calculated that the budget measures will cost independent care providers in England an extra £2.8bn in 2025-26, £940m in additional National Insurance costs, and £1.85bn in extra wage bills.

Given all these issues, would-be property investors are likely to face an unforgiving lending scene. As care homes are commercial assets, niche ones at that, some mainstream lenders are unlikely to be willing to lend on them[10]. Or, if they are, they’ll have very strict and costly criteria in place.

But, despite all these challenges, the care home sector offers plenty of opportunities for property investors, so long as it suits their circumstances. High yields are available, the entry costs are low, and with a management company in place, they can be a “hands-off” investment.

Specialist Finance – Useful Funding to Buy a Care Home

Fortunately, while it may be tricky to attain buying care home finance on the high street, we are happy to support borrowers investing in this complicated market. Across our bridging, BTL, and Bridge Fusion offerings, we can provide funding for care home investments. This includes acquisitions, second charges, refinancing, and more.

Also, while care homes may be a unique investment, that doesn’t mean our service levels will inevitably be slowed down. All our buying a care home finance options are underwritten from day one. We have a range of tools at our disposal to accommodate the needs of this market, boost loan size, and deliver funding quickly.

Property investors do not need to worry about how to get funding to buy a care home. At Market Financial Solutions, we will work hard to find a way forward for our brokers and borrowers. We will always look for a reason to lend, rather than find excuses not to.

Also, our underwriters will do all the heavy lifting on behalf of our clients. If working with a specialist lender that takes a truly proactive approach sounds tempting, we can be reached any time.