Care home & supported living finance

Who care home finance is for

We work with operators buying their first care home, with established providers expanding a portfolio, and with owners refinancing to release equity or fund refurbishment. The sector covers residential care, nursing care, dementia and specialist provision, and supported living, and the lending question turns on the same fundamentals across all of them: the strength of the operator, the quality of the home and the durability of its income.

Care is a specialist lending sector, and the right structure depends heavily on the operator. A first-time buyer with relevant management experience is assessed differently from an established group with a track record across several homes. We will tell you honestly which lenders are likely to support your case and how they will see it.

Going-concern versus bricks-and-mortar lending

Care home lending is structured in one of two broad ways. Going-concern lending treats the home as an operating business and sizes the loan against the trading profit it generates, taking account of occupancy, fees and the operator's ability to run it well. Bricks-and-mortar lending sizes the loan against the value of the property itself, as if it were sold with vacant possession or as a standing asset. The going-concern value of a well-run, well-occupied home is usually higher than its bricks-and-mortar value, which is why the chosen basis matters so much to how much you can borrow.

For an experienced operator buying a profitable, well-occupied home, going-concern lending often allows the most sensible structure. For a first-time buyer, a turnaround situation or a home with low occupancy, a lender may lean towards the more conservative bricks-and-mortar basis. We will set out which basis fits your case and arrange the funding accordingly.

CQC rating, occupancy and weekly fees

Lenders read the operating story closely. The CQC rating is a key signal of quality and risk; an Outstanding or Good rating supports a stronger case, while a Requires Improvement or Inadequate rating will prompt caution and may shape the structure or the basis of lending. Occupancy tells the lender how full the home is and how stable that has been, and the number of registered beds sets the scale of the operation.

Income comes from a mix of weekly fees, split between residents whose care is funded by the local council through social care and self-funded private residents, and any NHS-funded nursing contribution. Lenders look at the blend, because a healthy proportion of self-funded fees and a sustainable local council fee position both support the trading position. The local council fee is set following a needs and financial assessment of the resident, and the level varies between councils, so a home heavily reliant on local council funding is read differently from one with a strong private fee base. Lenders also weigh the cost base of the home, the operator's experience, the staffing position and the condition of the building. We package all of this so a lender can see the quality of the operation behind the numbers.

What care home finance is used for

We arrange care home finance for several purposes. The most common is acquisition, funding the purchase of a home or a portfolio of care homes for a first-time buyer or an expanding operator. We also arrange refinancing, to release equity, restructure existing borrowing or move off an expiring facility. Acquisition and refinancing cover most residential care and nursing home deals, but development is the other major strand.

Many cases combine more than one purpose. A purchase may include funds for refurbishment, or a refinance may release the equity that funds an expansion. We structure the facility around the operation and the plan rather than a single product.

Care home development finance

Development finance is a distinct strand of care home financing, used to build, extend or convert rather than to buy a trading home. We arrange development funding for ground-up new homes, for extensions that add registered beds to an existing home, and for the conversion of a building into a residential care or nursing setting. Development lending is released in stages as the build progresses and is repaid on completion, usually by refinancing the finished home onto a longer-term commercial facility once it is open and filling.

Care home development is assessed on its own terms. A development lender looks at the build cost, the value of the finished home, the planning position and your track record as an operator or developer, as well as the local demand for beds and the cost of care in the area. We will tell you honestly how a lender is likely to view the scheme, plan the exit by refinancing or sale from the outset, and approach the lenders most comfortable with care home development. Financing a new or extended home this way lets you add registered beds without committing the full cost up front, and the same development funding can sit behind a wider plan to grow a group of care homes.

Eligibility and what lenders look for

Lenders assess the home, its income and the operator. On the operation they look at the CQC rating, occupancy, the number of registered beds, the fee mix and the trading accounts. On the property they look at type, condition, location and value, and whether the building is genuinely fit for purpose. On the operator they look at care sector experience and track record, which carries real weight in this sector, the strength of the management team and the contribution from your own funds.

A good CQC rating, steady occupancy, a sustainable balance between local council and self-funded fees, and an experienced operator all strengthen a case. We will tell you honestly where your case is strong and where a lender will want more comfort, and approach the lenders most comfortable with care homes.

Indicative terms

Terms vary by lender, by the home and by whether the deal is lent on a going-concern or bricks-and-mortar basis, so these are indicative ranges rather than an offer. Care home lending commonly runs over fifteen to twenty-five years, with loan-to-value support driven by the operator's experience, the CQC rating, occupancy and the fee mix. Stronger, well-occupied homes with experienced operators attract the most supportive terms. Rates are priced over a reference rate and reflect the risk in the case.

We will give you a realistic, indicative view once we understand the home, the operation and your experience. All terms are indicative and subject to status, valuation and full lender approval. Commercial finance of this kind is not regulated by the Financial Conduct Authority, and nothing here is financial advice.

How we arrange it

We start with the home, the CQC rating, the occupancy and fee position, the operator's experience and what you want the funding to achieve, whether that is buying, refinancing or development. We then decide with you whether a going-concern or bricks-and-mortar structure fits, approach the lenders most comfortable with the care sector and come back with indicative terms. Once you choose a route, we package the case, manage the valuation and the lender, work with your solicitor, and keep the financing moving to formal offer and completion. You deal with us throughout, whether the deal is a single acquisition or a development of a new home.