Insights

How much is my care home worth? A valuation guide for UK owners

UK care homes typically sell for 5× – 9× normalised EBITDA, with the top of the range earned by high occupancy, a private-pay fee mix and a good CQC rating. The bottom of the range applies to older converted stock, occupancy below the low 80s or heavy agency staffing.

Care homes are among the most keenly bought businesses in the UK — and among the most misvalued by their own accounts. A home's statutory accounts routinely understate or overstate what an acquirer would actually pay, because care home value turns on operational metrics the balance sheet doesn't show: occupancy, fee mix, staffing ratios, CQC standing and the property itself.

This guide explains how care homes are actually valued, drawing on our background in the sector — the practice is led by a former Head of Corporate Sales at Christie & Co, the market leader in care transactions.

The short answer

An established, well-performing UK care home typically sells for 5x–9x normalised EBITDA as a going concern, with strong homes in consolidating regions exceeding that. Valuers and buyers cross-check the figure on a per-registered-bed basis, which in recent years has ranged from roughly £30,000–£50,000 per bed for modest homes to well over £100,000 per bed for modern, purpose-built homes with high private fee income. Where the freehold is owned, the property typically represents the majority of the value and the valuation must separate trading value from property value explicitly.

What drives a care home's value

Occupancy — level and stability. Sustained occupancy above roughly 90% supports the top of the range. A home trading at 75% is valued not on today's earnings but on a buyer's view of whether the empty beds are fillable, and why they are empty.

Fee mix. Private-pay residents at market rates are worth more per bed than local-authority-funded residents at commissioned rates, because the margin is structurally higher and fee increases are in the operator's control. The private/LA split is one of the first questions any acquirer asks.

CQC rating. A "Good" or "Outstanding" rating protects value; "Requires Improvement" suppresses it and narrows the buyer pool; enforcement action can make a home unsaleable as a going concern. Buyers price the rating they expect to inherit, including the cost and risk of turning one around.

Staffing. Agency dependence is the sector's margin killer. A home with a stable, directly employed team and a strong registered manager who will remain post-sale is worth materially more than one propped up by agency cover — and buyers will normalise the staffing cost either way.

The building. Registration size, room sizes and en-suite provision, compliance spend coming down the line, and scope to extend all move the figure. Purpose-built stock commands a premium over converted period property with its compliance and layout constraints.

Freehold or leasehold. A freehold going concern is valued as a package of trade plus property. A leasehold home is valued on earnings after rent, with the lease length, rent level and repair obligations directly affecting the multiple.

How the valuation is built

For a trading care home we normalise EBITDA carefully — correcting the owner's or manager's remuneration to market rate, adjusting agency staffing to a sustainable level, and stripping one-off costs — then apply a multiple evidenced by actual care transactions, cross-checked against a per-bed benchmark and, for freeholds, a bricks-and-mortar assessment. The result is triangulated rather than taken from a single formula, and the report sets out the basis in full.

That matters because care home valuations are relied on in exactly the situations where they get challenged: sales to consolidators running detailed due diligence, probate and inheritance tax submissions to HMRC, partnership dissolutions, and bank refinancing.

An illustrative worked example

The following home is fictional. It is included to show how a care home figure is actually assembled — not to suggest what any particular home is worth.

A 42-bed freehold home in a mixed catchment, running at 91% occupancy with 58% private-pay residents and a "Good" rating.

Illustrative and fictional. Note that the per-bed figure falls out of the earnings valuation as a sense-check; it is not the method. A report also separates trading value from the freehold value explicitly.

Where owners lose value without realising

Taking reported EBITDA at face value. Almost no owner-run home shows a true maintainable figure in its statutory accounts. A registered manager's cost may be understated because the owner covers part of the role; agency cover may be running at a level no buyer will accept as permanent; refurbishment may have been expensed in one year and not the next. Every one of those adjustments moves the price by a multiple of itself.

Confusing a per-bed number with a valuation. Per-bed benchmarks are a useful cross-check and a hopeless method. Two 40-bed homes on the same street can be millions apart on fee mix, rating and building condition alone.

Selling into a rating dip. A "Requires Improvement" rating narrows the buyer pool at precisely the point you need competition. If the sale is not urgent, restoring "Good" is usually the highest-return work available to an owner.

Letting occupancy drift before a process starts. Buyers value stable occupancy, not peak occupancy. A home that has run at 90%+ for two years is priced very differently from one that hit 90% last quarter after a year in the seventies.

Not separating property from trade. For a freehold, the split matters for tax, for lending and for how a deal is structured. Leaving it undivided hands the buyer the argument.

What to have ready before a valuation

We can work from less, but the more of this you have, the tighter the range: one to three years of statutory accounts and the latest management figures; a current occupancy record with the trend over the last 24 months; the split of residents between private-pay and local-authority funding with the fee rates for each; your staffing establishment and the agency spend within it; your current rating and the date of the last inspection; the registration certificate showing registered bed numbers; the tenure position, and for leaseholds the lease length, rent and repair obligations; and a note of any known capital spend coming down the line.

With that in hand the written report follows within three working days, for a fixed fee agreed before we start.

Common questions

How much is a care home worth per bed?

As a broad current benchmark: roughly £30,000–£50,000 per registered bed for older or LA-weighted homes, £60,000–£100,000+ for quality homes with strong private fee income, and above that for modern purpose-built stock in affluent catchments. Per-bed figures are a cross-check, not a method — two 40-bed homes can differ in value by millions.

What multiple of profit do care homes sell for?

Typically 5x–9x normalised EBITDA for an established home, with portfolio and consolidator deals at the upper end and small, manager-dependent or "Requires Improvement" homes below the range.

Does a CQC "Requires Improvement" rating reduce my care home's value?

Yes, usually significantly. It narrows the buyer pool, extends due diligence and hands buyers a negotiating lever. If a sale is not urgent, restoring a "Good" rating first is often the highest-return work an owner can do.

Is my care home's value in the business or the property?

For freeholds, usually both, and a proper valuation separates them — which matters for tax, for lending and for structuring a sale. A home can be worth more as a trading entity than the property alone, or occasionally the reverse where the real estate has alternative use value.

How do I value a care home for probate or inheritance tax?

On the same going-concern basis, but prepared to the standard HMRC expects, with the basis of valuation and comparable evidence set out. We produce probate and IHT valuations regularly; an unsupported figure is an invitation for HMRC to substitute its own.

What does a care home valuation cost?

Our independent written valuation is a fixed fee, from £495 for a straightforward sale or buy-side valuation, delivered within 3 working days from receipt of the information we need of receiving your accounts, occupancy and fee data. We do not sell care homes, so the figure carries no incentive to flatter you into a mandate.

The Business Valuers provides independent, fixed-fee valuations for UK SMEs, including care and healthcare businesses. Practice led by James Nelson, formerly Head of Corporate Sales at Christie & Co. Ranges above are indicative market observations, not a valuation of any specific home.

For a fixed quote on your care home, get in touch.