Post Budget: Is the care home market still a good investment?
On 8th March in his Spring Budget, Philip Hammond delivered the UK Governments’ pledge to invest an extra £2bn into social care over the next three years. Half of that will be made available in 2017/18 alone meaning a quick injection of cash will be on hand to help revive this failing industry. With the existing £7bn that the government had already earmarked for social care over the next three years, this is certainly a sizeable amount, but as the news has been digested over the past few weeks, questions have been asked. Will this pledge make a difference and will it allow the necessary changes to be made in order for care needs to be met for our aging population?
To some extent, yes, but although the financials seem impressive, they will barely make a mark on an industry that has been struggling with a lack of funding for decades. In fact, between 2005 and 2014 there was an 18% reduction in public spend on social care for the elderly. At the same time, there was a significant increase in the number of over 65’s in the UK with this trend likely to continue as life expectancy increases and birth rates fall. There is a lot of catching up to do by the public sector to make up for the deterioration of care over the last few years and reach the standards required and expected by those needing care and this costs money.
This could possibly signify that after the initial 3-year period has concluded, there will still be work to do and further investment could be on the cards. There are many factors to consider in order to improve the social care system and not all are associated with funding, such as inadequate staffing levels. However, this commitment has awoken the public interest and exposed the government’s previous failings to an extent they may not want to lose face in the future and will continue to fund this area of our economy.
Although the future of consistent Government funding is something that cannot be predicted, the simple acknowledgement that this is no longer an issue that can be brushed aside should give us hope that social care will remain at the forefront of spending for the foreseeable future.
The promise of extra funding is undoubtedly an enticing prospect for care investors and their involvement will only benefit the future of the care system in the UK. This should only increase the security of long-term investment, in particularly into care homes. Put simply, this is a perfect time to invest.
There will always be those that use local authority care homes and those that opt for and can afford private care. The need is such that there is a market for both, with the UK population expected to increase from the current 65.4 million in 2017 to 74.3 in mid-2039 when 1 in 12 people are projected to be aged 80 and over (Source: Office of National Statistics).
There is currently and will still be a shortage of good care homes in every area of the UK over the coming years, making the likelihood for new developments and the renovation of existing properties highly probable. This is certainly the case at Newton Manor in Manchester and Gramont House in Bradford, two existing care homes offered by Select Portfolio where a rolling schedule of refurbishment is planned.
Expenditure into the care home sector will remain an extremely attractive long-term investment with our healthcare opportunities providing assured returns of 8% and zero ongoing costs. There are not only financial gains to be made but also the reassuring knowledge that dependents will be offered the very highest quality care when they are at an advanced age and perhaps at their most vulnerable.
If you're interested in learning more about the need and opportunity for UK healthcare investment, or you'd like more details on our available investments opportunities, contact a member of our team today on +44 (0)1202 765011 or email [email protected]