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Supply of care home beds failing to keep up with demand – Knight Frank

The supply of care home beds rose by just 0.1 per cent in the past year to 480,072 across 12,034 care homes developers pausing operations to deal with the impacts of the pandemic, according to a report by global property adviser Knight Frank.

The stalled growth in supply adds to concerns that the sector is heading for “care bed crisis” in the coming decade, the company said.

Knight Frank’s UK Healthcare Development Opportunities 2021 research found UK care home supply has grown by six per cent in the last decade, while the UK’s over-65 population has increased by 22 per cent over the same period.

The limited growth in new stock, far outstripped by the growth in the over-65 population, is coupled with concerns around the quality of existing units, said Knight Frank.

“Older care homes are often converted from other use and many fail to provide adequate facilities for elderly residents. 29 per cent of existing beds lack ensuite facilities, an essential component of care provision, and 21 per cent of UK homes are currently rated by the CQC as Requires Improvement or Inadequate,” it added.

Furthermore, despite the partial abatement of the pandemic in 2021, the number of care home closures across the UK fell only very moderately in the 12 months to April 2021 versus the preceding financial year.

Knight Frank expects to see an uptick in closures as the government concludes its year-long financial support package, which will result in a further shortage of beds.

However, the report also highlights a number of positive indicators which point to a bounce-back in quality care provision post-pandemic.

An increase in vaccination rates among existing residents has seen a rebound in occupancy in the second quarter of this year, following a decline from 89 per cent to 79 per cent in the 12 months to April 2021.

This year has also seen the resumption of much of the construction activity which was paused or delayed as the pandemic took hold in 2020, leading to a healthy pipeline of new beds.

2021 has seen a return to near-pre-pandemic activity levels, with 35 new care homes (2,430 beds) delivered or due to be delivered by end of Q2, compared to 4,610 beds delivered in the whole of 2020.

There are over 7,000 beds currently under construction and a further 10,000 in the planning or tender stage.

“While the past year has seen a modest increase in the total number of beds, this rate of growth remains insufficient and we risk an imminent care bed crisis, especially given the projected surge in the UK’s over-65 population in the coming decade,” said Knight Frank head of healthcare Julian Evans (pictured).

“It is vital that new homes are built and existing stock is upgraded to meet the standards required of care providers. Though development activity is showing signs of recovery, the industry is still grappling with the latent effects of the pandemic, and we expect these problems to persist into the next year,” he added.

“There are concerns over limited finance funding development in the sector owing to increasingly risk averse high street clearing banks being reluctant to take a development risk combined with increased cost of raw materials and labour. A full recovery will rest on the targeted use of granular data to map regional demographic trends and pinpoint opportunities for development.”

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