Could Care Homes Prove the Perfect Investment?

Irene & Michael Agunbiade / February 20, 2019

Tags: Blog

People are living longer in most developed nations around the world; the UK being no exception. As a result, care homes are experiencing a ‘boom’. The main reason for this is that there just isn’t enough public sector funds to cope with the care and attention our elderly population requires at this point in time.

Not only have we recently been undergoing a period of austerity here in the UK, but there are fewer younger people around to pay the taxes that need to be ploughed into our social services and hospital care agencies. Worse still, figures by Age UK recently revealed that only around five per cent of elderly people will be able to support themselves financially, without any help from the state, by the time they retire.

Upmarket (or ‘luxury’) care homes are becoming popular with elderly individuals and couples who want to downsize and enjoy the company of other seniors. They can also benefit from the perks of living in such a community facility. This includes their own apartment, a concierge, visiting hairdresser and physio etc.

Another form of care home is that of a nursing home, specifically for dementia care – the need for such facilities is also predicted to increase heavily within the next decade or two.

A hands-free investment

It’s a fact that there will be more elderly people in the UK as the years progress – 23.6 per cent of the population will be aged 65 and over by 2035, according to an Office of National Statistics report. Is it any wonder investors are starting to become interested in care homes? Not only is there a guaranteed occupancy rate, but the yields tend to be impressive too. According to a 2018 report by healthcare research intelligence company, LaingBuisson, the average cost for a care home in the south east of England is £1,053 (most investment companies boast net returns of around 8 to 10 per cent). Meanwhile, investors can also look forward to the mounting capital appreciation they’re set to receive further down the line.

Care home investing is hands-free, since the care home will have its own management structure in place, as well as looking after the individuals in the home. Not only that, but there will be less wear and tear than in a regular buy to let.

Be wary of location

You are far more likely to find a successful care home in a country setting than slap bang in the middle of a city. The rural location and quietness will appeal to a sector of the population who probably prefer less action and noise than they once did. It should also be within the region of towns where there are elderly populations and fewer care beds so that the need will always be there. A care home in the vicinity of a large town such as Bournemouth or Cornwall in the South West of England, for instance, is ideal.

A market for older properties

Older properties tend to be larger than purpose-built facilities - provided they’re not dilapidated or need extensive renovation work done to get them to living standard, they can work well as care homes. Certainly, many of these older homes tend to be in the countryside, rather than in city centres.

In summary, a care home investment could be worth considering, especially if you’re keen on spreading out the risks by having a mixed property investment portfolio.

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Tags: Blog

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