FAQs

Buying

Is Stamp Duty payable on Care Homes?

Stamp Duty is payable on the sale of most Care Homes.  The calculation for Stamp Duty is dependent on the size and structure of the deal. Please contact Chandler and Co to discuss this in greater detail.

Is it necessary to have care sector experience in order to buy a care home?

Care sector experience is not necessarily required. Whilst the majority of lenders prefer experience in the sector, it is not essential.

How can I work out how much I can afford?

You will need a minimum contribution of 30% plus purchase costs. This can be made up of cash or additional security. 

Should I seek advice about Capital Allowances early on in the process?

It is always advisable to understand Capital Allowance implications as early in the process as possible. For professional advice, please contact Jex Capital Allowances.

What is the difference between a share / asset purchase?

With a share purchase you are purchasing the limited company that operates/owns the care home. This has implications on both purchasing costs and timescale. Please contact Chandler and Co to discuss further.

What margin can I expect?

Margins vary from lender to lender and are dependent on the size of the home, the type of borrower etc… Please contact Chandler and Co to discuss the latest situation.

How much does a valuation cost – what does it include?

A valuation will include an overall business appraisal. The details of this and acceptable companies to carry out the valuation are dictated by the lenders. Valuation costs vary according to the size and value of the business.

Does BACH charge me any fees (for example if they found a home they liked through our site)?

No – none at all

How much cash stake do I need?

You would need to have a minimum 30% contribution plus purchase costs, which would ideally need to be in cash as banks are reluctant to take other property as additional security, given the volatility in the general property market.

How long does the purchase process take?

There are many variables that will influence the timescale of any purchase. It can take around 6 months from the acceptance of an offer to completion given the need to arrange finance, instruct solicitors and complete registration with the Care Quality Commission (CQC). The transaction tends to be quicker when experienced healthcare professionals are used throughout the process.

What is the first step in buying a care home?

Decide what you want to buy. Naturally it is important that the business you decide buy suits your own individual skills and needs. It is prudent to consider what you are keen to bring to the business and also what return you are expecting in the short, medium and long term.

Legal

I am about to make an offer on a care home, how long is the purchase process likely to take?

The two issues that normally take the longest to resolve in a care home purchase are firstly the application for the CRB checks and the subsequent CQC application and secondly obtaining bank funding. It should be possible to complete a straightforward purchase in three months, but the average purchase probably takes in the order of four to five months.

I am preparing my care home for sale, what documentation is likely to be required by the buyer and his funder?

The core documentation that will normally be required by a care home purchaser is set out below:

  1. Inventory of Equipment that is included in the sale.
  2. List of Employees of the business.
  3. Copy of your Standard Employment Contract and any Contracts that are not in the standard form.
  4. If there are any items on HP/Lease, a list of the items and a copy of the Lease Agreement.
  5. Any Planning Permissions or Building Regulations Consents that you have.
  6. A copy of the current CQC Certificates (owner and manager).
  7. A copy of the last Local Authority Food Safety Check with confirmation that any issues raised by the local authority have been dealt with.
  8. A copy of the Fire Risk Assessment and any correspondence from the Fire Authority if there have been any recent inspections.
  9. A copy of the Asbestos Audit in respect of the property being sold.
  10. A list of residents and copies of the residents’ Contracts.
  11. A full copy of any Local Authority Pre-Placement and Placement Contacts.
  12. The latest Periodic Inspection Reports in respect of all electrical installations and all portable appliances.
  13. Any Safety Certificates for the gas appliances.
  14. The latest Inspection Report for the Fire Alarm.
  15. The latest Inspection Report for the emergency lighting system.
  16. A copy of the Heath & Safety Report.
  17. Any Inspection Reports for nursecall systems, lifts, baths, wheelchairs and hoists etc.
  18. Copies of the current Statement of Purpose and Service Users Guide.
  19. Copies of any contracts that the purchaser will take over in respect of maintenance of equipment, clinical waste, laundry equipment etc.
  20. Details of any actual or pending litigation, resident complaint or CQC investigations.
  21. A list of the main suppliers to the business.
  22. Details of the implementation of any recommendation for improvement from the last CQC inspection report.

How can I ensure that the person I am buying a care home from does not directly compete against me following the purchase?

The purchase contract would normally contain restrictive covenants preventing the seller (and if the seller is a company also the officers of the company) from directly competing against you. These clauses normally also prevent the poaching of staff and residents.

I am a new provider, what steps do I need to take to apply for registration with CQC?

The CQC website contains a section “For Organisations We Regulate” which sets out exactly the steps that need to be taken by the purchaser of a care home.

How much will my legal fees and additional costs be?

All costs will vary depending on the size and complexity of the individual transaction. Industry specialists will help control and keep costs to a minimum.

Can I use my family solicitor?

Of course you can, but buying a care home is a complex process. We do recommend that you take specialist advice from sector specific industry experts.

Registration

I’m worried about the registration process, how do I go about registering?

Chandler and Co will be happy to give general advice on the CQC registration process.

Finance

What can a broker do for me that I can’t do myself?

A specialist healthcare broker such as Chandler and Co have the relevant contacts within the industry to ensure a smooth transaction and make sure that the most competitive funding available is achieved.

Are banks still willing to lend in the current climate? Are interest rates reasonable?

The healthcare sector is a favoured sector by many of the lenders. To gain the most competitive funding, it is advisable to use a specialist healthcare broker such as Chandler and Co.

My bank says they can get me the funds I need?

Your high street bank manager may be able to offer you funding for your purchase but it may not be the most competitive package in the market. Also bear in mind that with an ever changing market your local bank manager may not have enough of an understanding of the industry to be able to advise you on whether you should buy the home – talking to a specialist / expert is essential.

It is worthwhile keeping your options open. An approach to one or two lenders may not give a fair reflection of the marketplace, or a reasonable opinion of how competitive the facility offered actually is.

Buyacarehome.com only recommends specialist finance brokers Chandler & Co. Working entirely in the Care Sector, Chandler & Co have access to every lender in the country and will give impartial, well-informed advice.

How do I arrange finance?

It is important to remember that Care Home funding is individually assessed and will even vary from purchaser to purchaser on the same business; therefore it is vital that you have specialist advice.

Buyacarehome.com only recommends specialist finance brokers Chandler & Co. Working entirely in the Care Sector, Chandler & Co have access to every lender in the country and will give impartial, well-informed advice.

Adult Care Sector

What does the CQC process involve?

In October of 2010, the adult care sector became regulated under a new system. For full information on this please contact the Care Quality Commission on http://www.cqc.org.uk/

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