There are many reports from recent media that state 71,000 additional care rooms will be needed in the UK in the next 8 years and a staggering 190,000 by the year 2035. This is down to an aging population in the UK where people aged 90 and above has been increasing steadily since 1980. According to the NHS federation the number of over 85s is predicted to rise to an astronomical 3.6 million in 2019 (which was only half that amount in 2014, at 1.5million). With the level of demand for care homes rapidly rising, it’s not hard to see why UK care room investments are becoming the investment of choice in these uncertain Brexit times.
The high yielding, hands-off nature of care home investments has always been very attractive to investors, (with fixed net returns typically around 10% and purchase prices from £49,950). But at the time of writing this article, the uncertainty of Brexit is still having an impact on the investment industry, understandably making investors nervous about where to place their hard-earned money. Which markets are the most stable? Which are consistently providing good returns? Which can you buy into at a reasonable purchase price? Care home investments seems to be the answer.
Care Home investments are becoming more popular now because of the certainty of their market, driven by the aging UK population and therefore resilient against any changes in Europe due to Brexit. Whichever sources you use when doing research into the demand for UK care homes, the answer is always the same: demand is very high and is only set to increase.
As with any type of investment asset, education is key. It’s vital to understand the market, the demand and any potential risks involved. There is a wide selection of reading available online and facts about the current market are easy to find. But we would always recommend speaking to an industry expert. Steve Long of Right Buy Homes has been working in the Care Home Investment industry for many years, and gives his thoughts on why these investments are now increasing in popularity:
“Quote from Steve”
Investors nowadays are rightly considering their exit strategies along with assured yield as key factors on choosing where to invest.
Care room investment is classed as a commercial purchase as opposed to residential which means buyers are not subject to buying taxes such as stamp duty. They also receive a genuine net yield; ground rent fees and management fees are not required from the investor as they would be when purchasing an investment in purpose-built student accommodation.
Investors are protected with a UK legally binding contractual agreement providing a fixed annual yield paid monthly or quarterly and a buyback agreement included often with an enhanced return percentage at the end of fixed term. Added security is provided on the room itself with a leasehold title deed duly registered in the UK land registry office.
I believe there’s no better assured fixed term income producing property product on the market.
You can browse an example of a current Care Room investment here or following Steve’s blog for further market news and updates.