The UK’s ageing population and rising demand for residential care make the care home sector a compelling opportunity.
However, purchasing and running a care home requires understanding regulatory compliance, market conditions, and operational demands.
Strong Demand but Limited Supply Creates Opportunity
Demand for care home services is increasing steadily, driven by an ageing population. Forecasts show a 7.1% compound annual growth rate (CAGR) for the sector from 2025 to 2035. Research by Care Management Matters predicts a shortfall of 58,000 beds by 2035, creating a strong market for investment.
Shifting Demographics Among Residents
Among care home residents aged 65 and over, the proportion aged 85 and above has decreased slightly, while demand for nursing care is rising. The sector is diverse, with growing ethnic representation and regional variations.
The North East and North West have the highest proportions of residents aged 65+ in care homes, at 2.9% and 2.8% respectively.
Workforce: Challenges and Opportunities
The care home workforce is estimated at 750,000 people, with 1.7 million posts across adult social care, including home care roles. Hiring can still be challenging. From April 2025, overseas recruitment requires evidence of reasonable efforts to hire individuals already in England, supporting the domestic workforce while meeting staffing needs.
Roles span supervisory and management, specialist care professionals, hands-on care roles, and support and administrative functions. Skilled staff familiar with regulatory compliance are essential to successful operation.
Compliance Requirements Every Care Home Must Meet
All care homes must register with the relevant authority; CQC in England, CIW in Wales, CI in Scotland, and RQIA in Northern Ireland. Compliance covers health, safety, fire, infection control, accessibility, and minimum space standards. Registered care managers with NVQ Level 5 in Care and Management must be employed.
Failure to comply can result in fines, legal proceedings, or custodial sentences.
Profitability Depends on Reputation, Occupancy and Funding
Profit depends on reputation, quality of care, occupancy rates, and fee structures. Nearly 50% of residents are self-funders, providing a stable revenue base. Regular investment in staff training, facilities, and compliance is essential to maintain high standards. Government support, including NHS-funded nursing care and local authority contributions, adds financial stability. Additional grant funding and a 7.7% increase in nursing care support strengthen the sector’s viability.
Location Matter: Choosing the Right Area to Buy
Location is key.
Areas with high elderly populations and limited care homes offer strong potential. Specialised services, such as dementia care, can differentiate a care home and attract residents in shortfall areas.
Why Partner with Redwoods Dowling Kerr for Your Acquisition
Buying a care home can be rewarding both financially and personally when approached with the right expertise. A specialist broker like RDK provides insight into prospective homes, highlights growth hotspots, and identifies areas with constrained supply, supporting your acquisition strategy.