Buy to let private rooms in Care Homes – will this fix the Care Funding Gap?

How will buy to let make life better for care home patients?

 Are private investors renting off rooms in care home likely to help the looming care home crisis?

A recent report by the Bureau of Investigative Journalism indicated that large profits are being promised for businesses and investors who purchase rooms in Care Homes.

Returns of up to 12% per annum are promised for the 10 year period.

Investors from far and wide are invited to buy leases on rooms in Nursing and Care Homes. They then get an annual rental income for a period normally for 10 years, and then are offered the option of the room being bought back off them for a 25% mark up after the 10 years are up.

How Common is the Practice becoming?

It’s hard to know how widespread this has become. Many of the deals are not apparent except after careful investigation. The Bureau of Investigative Journalism identified a company MBI which appeared to be forging links between Lancashire County Council and Dementia UK the full extent of which is not yet clear. But at present the extent of the deals being done or in the process of being done is unclear.

What Does this Mean for the Care Home and Nursing Home Sector?

Labour MP Ben Bradshaw has said that he actions of such investors raised serious questions for Government Ministers and regulators.

He indicated that this may be the beginning of a trend by Nursing Care Home Owners to try and deal with the increasing deficit in funds being available and the spiralling costs of the care being provided.

What Other Problems does the Trend Indicate?

Nursing and Care Homes are particularly vulnerable to the funding gap in social care. There are serious questions being raised about the financial stability of current nursing home providers and the quality of the care being offered.

Will this Solve the Problem?

It seems unlikely that this will solve the long term social care funding deficit. In addition there are also concerns that the investors getting involved have less than perfect track records in their previous business ventures. None of this suggests that this trend- if allowed to continue is likely to solve the underlying problem

 Will Vulnerable Elderly Be at Risk?

The people who may be most affected by these changes are amongst the most vulnerable in society. They are coming into contact with investors whose primary concern is not patient care but annual returns of profit. It does not bode well for the future.