UK Healthcare: More care home development required as closures counterbalance new stock

With 133 new care homes hitting the market in the last year (as of April), no one can deny that a supply response is gaining momentum in the healthcare market. And such a response has never been more needed with much of the UK’s care home stock outdated and elderly population growth expected to drive unprecedented levels of bed demand going forward. 

However, Knight Franks’ latest analysis of supply in the sector shows that the number of new homes being built (new registrations) continues to be counterbalanced by the number of home closures (de-registrations) - Just at the time when the market needs to grow. The data shows that 219 existing homes and 6,459 beds were de-registered and a total of 133 new homes and 6,502 beds were added to the market. This resulted in a net loss of 86 homes, but the larger scale of new homes delivered meant the UK saw a marginal net gain of 43 beds.

Broadly speaking, the number of new beds being added is being counteracted by the number of homes being removed, and this trend needs to change as the ageing time bomb kicks in over the approaching decades.

Care homes are closing for some key reasons. Many closures are the result of failing care standards with the CQC mounting pressure on care providers to deliver higher standards of care, and rightly so. Financial stress has also been the cause of many closures – homes have been battling hard against rising staff costs which have grown by 5% per annum since 2013 as a result of increases in the National Living Wage. This has impacted many homes, particularly those dependent on local authority-funded residents.