Assisted living and care acquisition finance

How is a supported living or care asset valued for lending?

There are two valuation bases, and the right one depends on the asset. A specialist supported housing or supported living property let on a long lease is valued on its rental income: the contracted, index-linked rent from the registered provider, capitalised at a yield that reflects the lease length and the strength of the covenant. Indicative net yields on supported housing let on long index-linked leases to a registered provider run around 5 to 6% on Knight Frank UK Living Sectors Yield Guide / market commentary, though that varies sharply with the lease terms and the provider. The valuer will also assess the vacant possession value of the building as the downside, because if the lease falls away that residual value is what the lender relies on.

A trading care home is valued as a going concern. The valuer builds up from the sustainable EBITDARM, mature occupancy, the fee mix between private and local-authority funded residents and the CQC rating, then applies a multiple or capitalisation rate. Average mature care home occupancy ran at 88.7% in 2025 and the average operator EBITDARM margin was 30.1% on the Knight Frank UK Care Homes Trading Performance Review 2025. Indicative going-concern value sits at £100,000 to £150,000 per bed for a modern, well-occupied purpose-built home on Knight Frank / care market commentary, with older and converted stock materially lower. That going-concern figure is usually well above the bricks-and-mortar value, and lenders differ on which basis they will use, so placing the deal with the right funder matters.

How much can you borrow to buy a care or supported living asset?

For a supported living investment let on a long lease to a registered provider, lenders typically advance up to around 70 to 75 percent loan to value against the lease, because the income is contracted and indexed. For a trading care home, lenders usually advance up to around 65 to 70 percent of the going-concern value, with the strongest terms reserved for modern, purpose-built homes with a settled CQC rating and a track record. Loans run from around 250,000 pounds to many millions.

On a trading home the headline loan to value is only one of two ceilings. The lender also sizes the loan so the EBITDARM covers the debt service with a clear margin, and on a full price that cover test, not the loan to value, often sets the final number. On a leased supported living asset the equivalent test is rent cover against the contracted lease income. We model both before you offer, so you know your real borrowing ceiling and the equity you need. Plan for roughly 25 to 35 percent of the price in cash, plus stamp duty, legal, valuation and arrangement costs.

Should you buy the property or the operating company?

There are two ways to buy a care business. An asset purchase buys the freehold home, the registration and the goodwill directly. A share purchase buys the company that owns and operates the home, taking on its history, contracts, CQC registration and tax position. Share purchases can carry a stamp duty saving and keep the trading record and the CQC registration intact, which matters because a fresh registration takes time, but the buyer inherits the company's liabilities, so due diligence is heavier and some lenders prefer the cleaner asset route.

The structure changes how the finance is built. On a share purchase the lender typically takes a debenture over the company and security over the property within it, and wants comfort on historic liabilities and on the continuity of the CQC registration and the management. On an asset purchase the security is a straightforward charge over the home. For a leased supported living property the question rarely arises, because the buyer is acquiring the freehold investment subject to the lease. We arrange funding for each route and flag early where a lender's preference would change the terms.

What does a lender want to see from the buyer?

For a trading care home the lender underwrites the home first: three years of accounts where they exist, the occupancy history, the fee mix between private and local-authority residents, the staffing and agency reliance, the CQC rating and any enforcement history, and the bed numbers and room sizes against modern standards. It wants evidence the EBITDARM is durable rather than propped up by under-investment. For a leased supported living asset it underwrites the lease and the registered provider instead: the unexpired term, the indexation, the repairing obligations and the financial strength and regulatory standing of the provider.

It then underwrites you. An experienced operator adding a home is straightforward. A first-time buyer is financeable too, but the lender will want a credible operating plan, usually an experienced registered manager and a clear route through CQC, and evidence you understand the cost base and the fee-funding landscape. We help shape that pack so the case lands well, and we match first-time buyers with the lenders who genuinely back new entrants in the sector.

Which assisted living and care assets qualify?

Lenders fund the full spread of the sector: specialist supported housing and supported living let to registered providers, exempt accommodation and lease-based supported housing, residential and nursing care homes, extra care and retirement living schemes, and care or supported-housing portfolios. Modern, purpose-built homes and well-structured long-lease supported living attract the widest appetite and the keenest pricing, because the income is most proven and the security strongest.

Converted and older stock, short unexpired leases and smaller or single-asset operators need more careful placement. A lease-based supported housing property depends entirely on the lease and the provider, and lenders look closely at the headlease versus the underlying registered-provider arrangement and at the regulator's scrutiny of lease-based providers. A care home with a requires-improvement CQC rating or heavy local-authority fee reliance narrows the field. We know which lenders lean into each format, so the deal goes to funders already comfortable with it instead of being shopped blind.