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The care sector is highly revered in the UK. There are currently 480,000 beds across 12,000 care homes in the UK and, due to the quality of the care being delivered, the number of people living beyond the age of 80 years old is set to increase by 1.1m between 2022 and 2032.
This increase highlights a major opportunity for growth in the sector, which, at present, is not being met. Find out how you and your clients, can become a crucial part of growing and maintaining this important work.
To meet this major growth in the next 10 years, the care sector requires more investment. Currently, the trajectory of this investment does not paint a sufficient picture for care homes to keep up with projected workloads.
To meet demands, an additional 144,000 beds will be needed by 2032. The current rate of care home construction does not indicate that this demand will be met. In fact, as of September 2023, there were 132 care homes offering 5,900 beds being built, with a further 23,300 beds planned at the time. At this rate, market analysts predict there to be a 200,000 bed shortfall by 2050.
It’s not just the building of new care homes that’s the issue, though. The Health and Social Care (Safety and Quality) Act of 2015 outlines various standards that care facilities and practitioners must abide by. The Care Standards Act has been in place since 2000, yet many existing care properties don’t meet the measures set out in such acts. Enforcing such regulations on existing properties would result in too many of them shutting down for upgrades – putting a major pause on all care activity.
Although there are clear growth opportunities in care, the sector isn’t without its own challenges. These challenges should be considered carefully before investing.
Staff shortages are by far the biggest constraint on care homes as of 2024. Market estimates place a figure of 150,000 vacancies in adult social care, meaning a vacancy rate of just under 10% - that’s one in ten positions unfilled.
With no willing staff, operators usually turn to care agencies – a high-cost solution compared to employing and maintaining regular staff levels.
With hundreds, sometimes thousands of pieces of equipment, all of which draw high energy levels 24/7, the recent energy crisis in the UK has made fees a substantial cost in day-to-day operations. In 2023, Care England, in partnership with Ofgem, found that heating costs for care homes had increased by 500% in the year prior.
If there was ever a sector that needed financial backing from investors, care would be it. The shortages outlined above present a keen opportunity for experienced operators in the sector.
As the backbone of the UK’s care system, the private and public care home industry is one that is continually in demand. Statistics from earlier in this article show that the care sector is nearly always in a position of needing more and more investment, and hands on deck, to cope with demand. This demand makes care a vital component of our society; something that will remain true for many, many years.
Although there is nearly always demand for more care homes and staff, the success of a facility nearly always comes down to the quality of care being delivered. Delivering this quality has become more difficult lately due to external factors, such as Brexit, causing a reduced number of workers available.
On average, care home staff receive low salaries. Starting positions have salaries of £18,000 a year, while the current national minimum wage sits at £20,820 a year. With job satisfaction having a major impact on the quality of care, it makes sense to ensure that staff are well looked after.
Combining the above, the care sector offers many long-term returns for those who get the formula correct. The overall market value of the care sector is estimated to be £23 billion as of late 2023. This follows a dip to £17.4 billion during March 2021 – an increase of 24% over two years. As a stable and rewarding investment, the care sector is quite attractive.
Under our commercial real estate services, Aldermore’s goal is to back ambitious investors who want to make a difference in the lives of others. We’re keen to work with operators of existing facilities that are looking to expand or improve their endeavours. If you’re one of those operators, contact us to talk more about how we can help.
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