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How to buy a care home: the process, due diligence and funding

A step-by-step guide to buying a care home in England: share or asset purchase, CQC registration, the checks lenders rely on and how the price is funded.

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In short

Buying a care home usually means agreeing heads of terms, obtaining a trading valuation and funding in principle, completing financial, regulatory and property due diligence, and settling CQC registration before completion. Most purchases combine a commercial mortgage on the home's trading value with the buyer's own equity, sometimes with deferred payment to the seller. Lenders focus on occupancy, fee levels, staffing costs, the CQC rating and the buyer's experience of running care services.

This guide is for operators adding a home to their group, registered managers and nurses buying their first home, and investors partnering with an experienced operator. Buying a care home is buying a regulated business with vulnerable residents, a workforce and a building, so the sequence of steps matters as much as the price. Smart Funding Solutions is a broker, not a lender: we arrange acquisition funding from around £10,000 to £500,000+, with larger facilities available in suitable cases, by approaching lenders on our panel of 300+ that understand healthcare property. For the wider range of funding for the sector, see our care home finance hub.

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The steps from offer to completion

Heads of termsPrice, structure, what is included (furniture, equipment, vehicles), any deferred payment and an exclusivity period.
Funding in principleA lender reviews the accounts, occupancy and your background and indicates what it may lend, subject to valuation.
Trading valuationA specialist valuer assesses the home as an operating business, based on sustainable earnings and the condition of the building. Our guide on how to value a care home explains the method.
Due diligenceFinancial, legal, regulatory, employment and property checks, covered below.
Registration and approvalsCQC registration or notifications, plus any consent needed from the landlord if the home is leasehold.
Legal completionFunds drawn, the business and property transfer, and residents and families are told who the new owner is.

Decide what kind of home you can run

Two homes with the same number of beds can be completely different businesses. Before looking at listings, be clear about:

Residential or nursing. A nursing home needs registered nurses on every shift and a clinical lead, which raises costs and makes recruitment harder, but earns higher fees and NHS-funded nursing care contributions for eligible residents.
Who pays the fees. Private self-funders generally pay more than local authority placements. A home reliant on one council's fee rates carries a different risk from one with a strong private mix, and lenders price that in.
Specialism. Dementia, learning disability or mental health services need specific skills and are often commissioned differently; see specialist care finance.
The building. Purpose-built homes with en-suite single rooms are easier to fill and fund than older converted houses with shared rooms, stairs and small bedrooms.

How the purchase is funded

Most purchases combine several sources. A care home mortgage secured on the property provides the long-term senior debt, lent against the trading valuation. The buyer's equity makes up the balance, and lenders generally want a meaningful cash contribution, particularly from first-time owners. Other layers that sometimes appear:

Deferred consideration from the seller, paid over time or linked to performance, which reduces the cash needed at completion. See vendor finance and deferred consideration.
A secured loan on other property you own to fund part of the deposit.
Working capital for the first months, when council payments can lag and new contracts need setting up in your name.
Equipment finance for profiling beds, hoists, call systems and minibuses, which keeps them outside the property borrowing.

For how acquisition funding works more generally, including buyouts by existing managers, see our acquisition finance section.

Illustration: a first home for an experienced manager

Illustration, with hypothetical round figures and no rates: a registered manager with fifteen years in residential care agrees to buy a 30-bed residential home for £1.5 million as a going concern. The trading valuation supports the price. A lender offers senior debt for part of the price, conditional on a cash contribution and on the current deputy manager staying in post. The seller agrees to defer a slice of the price for two years, and the buyer funds the rest from savings and a secured loan against a small commercial unit she owns. Because it is an asset purchase, completion waits for her new company's CQC registration, so exclusivity in the heads of terms is set long enough to allow for it.

Risks to weigh before you commit

A care home carries fixed staffing costs and variable income, so a fall in occupancy after purchase hits profit hard and quickly. Lenders usually ask for personal guarantees from buyers, and borrowing secured on the home means the building is at risk if repayments fail. A poor inspection after completion can slow referrals. Buying a home that is too large for your first acquisition, or too dependent on one commissioner, magnifies each of these. Some buyers begin by managing or leasing a home, or buying a smaller one, before taking on a larger freehold purchase.

Underwriting

Due diligence that lenders review

Occupancy

Monthly occupancy for at least the last two years, not a single snapshot taken at a good moment.

Fees

Rates by resident, how many are self-funded, council-funded or receiving nursing contributions, and when fees were last increased.

Staffing costs

Wages as a share of income, agency spend and vacancy levels. Recruitment of new care workers from overseas closed in July 2025, so homes that depended on sponsored staff face a different recruitment position; lenders ask how the rota will be filled.

Regulatory history

The current CQC rating, the last inspection report, any enforcement action, safeguarding referrals and complaints.

The building

Fire risk assessment and compartmentation, water safety, lifts, call systems and a realistic budget for works the last owner deferred.

People

Whether the registered manager is staying. A good manager leaving on completion is one of the most common reasons occupancy slips after a sale.

Checklist

Documents a buyer should assemble

Your CV and care sector experience, and that of your proposed registered manager
Heads of terms and the seller's information pack
Three years of the home's accounts and recent management accounts
Monthly occupancy and fee schedules
Staff list with roles, pay rates, agency use and visa sponsorship details
CQC reports and your registration application or evidence it is under way
Your business plan and cash flow forecast for the first two years
Evidence of your deposit and personal assets and liabilities

Side by side

Compare your options

How the main business finance structures work. Lenders set their own terms, so treat this as a guide to the questions to ask.

Option	How you repay	Security	Often used for
Unsecured business loan	Fixed instalments, usually monthly	No charge over assets; a personal guarantee is usually required	Growth, stock, tax bills and cash flow
Secured business loan	Fixed instalments, often over a longer term	A charge over property or other assets	Larger sums, property and refinancing
Revolving credit facility	Interest on what you draw; repay and redraw	Varies by lender and case	Recurring or uneven cash flow gaps
Merchant cash advance	A share of future card takings	No charge over assets	Card-taking businesses with uneven months
Asset finance	Regular payments over the life of the asset	The asset being financed	Equipment, vehicles and machinery
Invoice finance	Settled as customers pay their invoices	Your unpaid invoices	Businesses waiting on customer payment

General information only. Every lender has its own criteria, and all finance is subject to status.

How the deal is structured decides what you take on and what the regulator needs from you.

	Buying the company (shares)	Buying the home (assets)
CQC registration	The registered provider stays the same legal entity, though changes to directors, the nominated individual or manager must be notified	The buyer must be registered as the new provider for the home before it can operate it
Staff	Employment contracts stay with the company	Staff transfer to the buyer under TUPE on their existing terms
Liabilities	You inherit the company's history, including tax, claims and contracts	Cleaner, though some liabilities still follow the staff and the building
Lender view	Needs financial and legal due diligence on the company as well as the home	Simpler security, but timing is tied to registration

CQC explains what each party must do when you buy, sell or transfer a registered business. On an asset purchase, the registration timetable is often the longest item on the critical path, and lenders will not complete until it is resolved. The TUPE rules on business transfers apply to the staff, including consultation duties.

The broker’s view

How we help

We work through the numbers with you before heads of terms are signed, so the structure suits a lender as well as the seller. We then approach lenders on our panel that fund care home purchases, present the home and your experience properly, coordinate the valuation and keep the funding timetable aligned with registration and legal work. The lender makes the decision. It is free to enquire; any broker fee is disclosed separately before you proceed.

FAQs

Questions clients ask

Do I need care experience to buy a care home?

You do not need to be a clinician, but lenders and CQC both want to see that the service will be run by competent people. Buyers without direct experience usually need an experienced registered manager in place, and often an operating partner, to secure funding.

How long does it take to buy a care home?

It varies with the structure. Share purchases can move faster because the registered provider does not change. Asset purchases depend on the new provider being registered with CQC, which can take several months, so allow for it in the exclusivity period.

Can I buy a care home that has a Requires Improvement rating?

Yes, and such homes can be good opportunities, but fewer lenders will fund them and those that do will want a credible improvement plan, an experienced team and usually a larger buyer contribution. An Inadequate rating or enforcement action narrows the options further.

Can I buy a leasehold care home?

Yes. You buy the business and take an assignment of the lease. Lenders look closely at the rent, rent reviews and the remaining lease term, and funding is usually lower because there is no freehold to secure.

How much deposit do I need to buy a care home?

There is no fixed figure, because each lender sets its own limits based on the home's trading valuation, its occupancy and rating, and your experience. Buyers usually need a meaningful cash deposit plus funds for fees, stamp duty and working capital for the first months. Deferred consideration from the seller or a secured loan on other property can reduce the cash needed. Our page on care home mortgages explains how lenders size the main loan.

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