The UK care and supported housing market

The UK care and supported housing market is a large, growing and increasingly institutional sector that spans trading care homes, specialist supported housing let on long leases, and extra care and retirement living. It is underpinned by a powerful demographic story and a long-standing shortage of suitable accommodation, which is why investment capital has moved into it at scale.

This guide sets out the market with sourced data: the number of care homes and beds, occupancy and fees, operator profitability, yields, the supply gap and the demographic demand behind it. We arrange finance across this market as a broker and introducer. We are not a lender, and nothing here is investment, tax or legal advice; every market figure carries its source.

How big is the UK care home market?

The UK has around 16,500 care homes on carehome.co.uk Care Home Stats for 2025, providing roughly 465,000 beds on carehome.co.uk and Nuffield Trust figures, split approximately 70 percent residential and 30 percent nursing. This is a large, fragmented market, with a long tail of small independent operators alongside the larger care groups, and it represents a substantial stock of trading businesses and specialist property across the country.

Alongside the trading care homes sits the supported housing market, which serves working-age adults with support needs as well as older people, and the extra care and retirement living sector. The wider estimated UK assisted living market was worth around £11.5 billion and has grown about 9 percent a year over the past five years on IBISWorld figures. Taken together, care and supported housing form one of the larger specialist property sectors in the country, and one of the few underpinned by a demographic certainty rather than a cyclical trend.

What occupancy and fees does the sector run at?

Average care home occupancy ran at 88.7 percent in 2025, up from 88.3 percent in 2024, on the Knight Frank UK Care Homes Trading Performance Review 2025. That is a healthy level for the sector and reflects steady demand against a constrained supply of beds. Occupancy is the single biggest driver of a care home's trading performance, because the cost base is largely fixed and each additional occupied bed contributes strongly to profit.

Fees have risen sharply. The average UK care home weekly fee reached £1,298 in 2025, up 9.8 percent year on year, on the same Knight Frank review, driven by cost inflation, staffing pressures and a tight supply of beds. The mix between higher-paying private residents and local-authority funded residents varies by home and region, and it materially affects profitability, since private fees typically sit above local-authority rates. Strong occupancy combined with rising fees has supported the sector's trading recovery.

How profitable are care operators?

Operator profitability is measured by EBITDARM, the earnings before interest, tax, depreciation, amortisation, rent and management. The average operator EBITDARM margin reached 30.1 percent in 2025, up around four points year on year, on the Knight Frank UK Care Homes Trading Performance Review 2025. That improvement reflects the combination of rising fees and recovering occupancy outpacing cost growth, and it is the figure that drives both how operators are valued and how lenders size debt against them.

Profitability varies widely around that average. A modern, well-occupied home with a strong private-pay mix and an efficient cost base runs well above it, while an older home reliant on local-authority fees with empty beds runs below. Because care homes are valued and financed as a multiple of sustainable EBITDARM, the margin a home actually achieves, not the sector average, is what determines its value and its borrowing capacity. The recovery in the headline margin has nonetheless improved sentiment and lending appetite across the sector.

What yields and values does the market price at?

Prime care homes, meaning modern, purpose-built homes with strong operator covenants, traded at yields of around 4.5 percent on the Knight Frank UK Living Sectors Yield Guide for September 2025, with secondary stock pricing materially wider. Specialist supported housing let on long index-linked leases to a registered provider traded at indicative net yields of around 5 to 6 percent on the same source, the higher figure reflecting the extra covenant and regulatory risk in the lease-based model.

In capital terms, the indicative going-concern value for a modern, well-occupied, purpose-built care home runs at around £100,000 to £150,000 per bed on Knight Frank and care market commentary, with older and converted stock worth materially less. Investment activity has been strong: UK healthcare property transactions were forecast at around £12 billion for 2025, more than treble the long-run annual average, on Knight Frank figures, while wider UK Living investment reached £3.2 billion in the third quarter of 2025 on CBRE data. The sector has firmly moved from niche to institutional.

What drives demand for care and supported housing?

The demand thesis is demographic and structural. The UK population aged 85 and over was around 1.6 million in mid-2018 and is projected to reach roughly 3.0 million by mid-2043 on Office for National Statistics national population projections, nearly doubling the group most likely to need care. At the same time, care home bed supply has fallen to 26.7 beds per 100 people aged 85 and over, down from 33.7 in 2010, on Nuffield Trust figures, so supply is shrinking just as demand rises.

Supported housing faces its own gap. The National Housing Federation estimates the country needs between 179,600 and 388,100 additional supported housing units, including around 91,100 for working-age adults and up to 297,000 for older people. This combination, a fast-growing older population, falling bed supply per head and a large supported housing shortfall, is the structural backdrop that distinguishes care and supported housing from cyclical property sectors, and it is the foundation of the long-term investment case.

How does finance flow into the market?

Finance reaches the sector through products matched to the asset. Trading care homes are funded with commercial mortgages sized on going-concern value and serviced from EBITDARM. Specialist supported housing is funded on the registered-provider lease and the provider covenant. Developments are funded with development finance against build milestones, often with a pre-let or forward sale, exiting onto investment debt or a sale. Bridging funds fast or transitional situations, and refinance releases capital from stabilised assets.

The lenders active in each part differ: those comfortable underwriting a trading care home's EBITDARM are not always the same as those who understand a lease-based supported housing covenant, and the development lenders are different again. That fragmentation is exactly why specialist broking adds value. We arrange acquisition finance, commercial mortgages, bridging, development finance, mezzanine, equity introductions and refinance across the whole sector, matching the lender to the asset and packaging the evidence the way credit teams want it. We act as a broker and introducer, not a lender.