Written by Matt Lenzie. Published by Care Homes Finance.
Market commentary as at the second quarter of 2026.
Watch the 2026 market outlook
A short walkthrough of where the UK care home finance market sits in 2026: how lenders read a trading home, what is moving pricing, and where the funding actually comes from.
A UK care home is not funded like an ordinary building. It is funded like a specialist operating business that happens to own property. Lenders look at the cash the home generates and the regulatory standing of the operation, then lend against the value those things create. That single idea explains almost everything else about how the money works in 2026.
The demand backdrop is the part nobody disputes. The Office for National Statistics puts the UK population aged 85 and over at 1.75 million in mid-2024, around 2.5 percent of the population, and projects it to roughly double to 3.6 million by mid-2049. That cohort is the core driver of care home demand, and a doubling over twenty five years is the reason long term capital keeps arriving in the sector.
Investment has followed that thesis hard. Savills reported more than 12 billion pounds invested in UK healthcare real estate across the full year 2025, the highest annual total on record and around four times the prior five year average, though that figure covers all healthcare property and was inflated heavily by large corporate transactions. CBRE found in its 2025 UK Healthcare Sentiment Survey that 93 percent of surveyed healthcare investors were looking to deploy capital into the sector. Demand for the asset is not the question in 2026.
The trading story underneath has also improved. Knight Frank, in its UK Care Homes Trading Performance Review 2025, put average occupancy across private UK care homes at 88.7 percent in the 2024/25 financial year, the highest since before the pandemic, with the average EBITDARM margin at 30.1 percent of income, up around four percentage points year on year. EBITDARM, the sector profit measure that strips out rent and management charges, is the number lenders underwrite against, so a recovering margin directly improves how much a home can borrow.
The anchor for pricing is the Bank of England base rate, which has held at 3.75 percent since the December 2025 cut. Care home term debt is quoted as a margin over a reference rate, so a held base rate underpins 2026 affordability. The honest summary for the year: strong long run demand, record investor appetite, recovering trading margins, and a stable rate backdrop, set against a fragmented market with a large share of older stock that the modern, purpose built homes are slowly replacing.
Care Homes Finance is a specialist finance resource for the UK care home sector. We are a broker, not a lender. We are not FCA authorised. Commercial finance on care home property is generally unregulated. Where regulated activity is required, we introduce to FCA-authorised firms. Everything on this site is general market commentary, not regulated financial advice, and every figure is third-party research-house data attributed to its source. Take professional advice for your own situation.
Listen to the episode
The full 2026 outlook in podcast form, hosted by Georgina. We cover pricing, the lender camps, the CQC rating as the single biggest swing factor, and the funding options for buying, building, refinancing and turning a home around.
View our other content around Carehome Finance in 2026