Occupancy levels at UK care homes have risen by 5% and later living operators have enjoyed profit growth as the sector continues to recover from the pandemic, according to Knight Frank’s 2022 UK Care Homes Trading Performance Review.
The review found some UK care homes are already trading at pre-pandemic levels, with occupancy rates across the UK up to 84.3% compared with last year’s 79.4%. Operators are also seeing increased demand for beds and average weekly fees have increased by 3.3% year-on-year to £980. Sector-wide EBITDARM as a percentage of income modestly increased from 26.2% in 2021 to 26.3% this year.
Knight Frank’s research also highlighted a disparity between the profitability relative to care standards and size with homes receiving an ‘inadequate’ CQC rating trading at a margin of 22% compared with homes that have an ‘outstanding’ rating, which trade at a 34% margin. The most profitable size range is homes that offer 60 to 100 beds, which trade at approximately 29%.
Julian Evans, head of healthcare at Knight Frank, said: “Despite further economic turbulence, we’ve seen further evidence of the resilience of the sector as proved by rising occupancy rates and stabilising profit margins. However, it would be remiss not to acknowledge the potential headwinds due to inflationary pressures with rising energy costs, the cost-of-living crisis and staffing shortages and what extent average weekly fees can increase in line with these costs to ensure that the sector is best positioned to absorb these.
“There is no doubt that support from the government, local authorities and regulators is crucial in these challenging times and whilst we do remain optimistic on its outlook, the sector will be leaning on a combination of its operators, investors, developers, lenders, and local government to maintain its resilience through the next 12-24 months.”
