Why is the government relying on private companies to provide care home beds? What opportunity does this give investors?

84% of care home beds in England are owned by private firms as the government is increasingly reliant on private companies to cover the shortage of facilities.

The number of councils that have turned to private companies to accommodate elderly patients has increased in the past few years as funding has decreased, a study has found.

Britain’s changing demographic – social care spend and shortfall

Britain’s population is ageing and the government does not have the resources available to provide care for them. In 2018 central government gave local authorities £21.3bn for social care, less than the £22bn it gave in 2011. The ageing population has only exacerbated the funding issues. According to the Office for National Statistics, in 2016 18% of the population was aged 65 and over and in some regions as many as one in three people were over the age of 65. With regards to future demand, according to The Lancet more than one million more people aged 65 and over will need round-the-clock care by 2035, which is a rise of over a third.

Government failing to tackle problem – even with promise of increased spending

A budget shortfall has meant that the government is more reliant than ever on private companies, who are willing to bridge the gap as there is a sustained demand for beds. Whilst Boris Johnson has pledged to invest more money in the social care sector, going off records of previous government’s investment suggests this isn’t likely to materialise. Under the Conservative government, spending on adult social care in England has fallen by 3% since 2009/10 according to the Institute for Government.

Even if the cash injection is delivered as promised, many are in double whether it will go far to remedy the situation. Think Tank the King’s Fund described the social care funding boost as “the bare minimum needed to patch up services for another year”, suggesting it is just papering over the cracks of a much deeper problem.

How can this create opportunity for private investors?

Care home investments are a relatively new phenomenon but researched correctly can provide healthy returns for investors and a care bed for an elderly patient. Without the beds being available, care would have to be provided by family members or visiting staff, the latter or which would work out costly and the former isn’t always logistically possible if family members have jobs and children to look after, or if their own health is in decline. Other obstacles include a lack of support and low levels of training. The value of unpaid care in the United Kingdom is estimated to be £132billion a year.

When someone is no longer able to support themselves and require more care than a family member can offer / is trained to help with, choosing a space in a care home is an alternative option. According to Laing and Buisson survey carried out in 2016, approximately 416,000 people live in care homes, and more visit as part of respite care.

In Leeds by 2037 one in four people will be aged 65 or over according to the International Longevity Centre (2014). This high percentage means that there will be a sustained demand for care home beds, and even at present demand outstrips supply in every single English region with an overall shortage of 65,000 beds. Investing today means that a care home bed can be provided now when it is needed, and in the future where there will still be demand.

Demographics such as these must be considered when choosing a care home investment. Contact One Touch Property today to find out more about a care home investment in north Leeds which is a successfully operating care home with a CQC rating of Good. Investors can purchase a room from £84,995 and receive a 10% net return over a ten-year commercial lease.

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