The short answer: what you are actually buying
When you buy a care home, you are buying a regulated stream of fee income, a workforce and a building, in that order of importance. The property is often the easiest part to value. The fee income, the occupancy trend, the staffing liabilities and the position with the Care Quality Commission, the regulator for adult social care in England known as the CQC, are where the real risk and the real price sit.
Think about what actually generates the value. A care home earns from local authority placements, from NHS-funded nursing care, from Continuing Healthcare packages and from private self-funders, often all at once and all at different fee rates. That income only exists while the home holds a live CQC registration and a rating that families and commissioners are willing to trust. Buy the bricks without understanding the income and the regulation behind them, and you have bought an expensive building with a care business bolted to it that you may not be able to run.
This is why a care home purchase needs specialist healthcare and care accountants rather than a generalist who treats it like any other business sale. The mechanics of a care deal, the way you structure the deal for tax and liability, and the CQC route are specific to the sector, and a wrong turn on any of them is expensive to undo. If you are weighing a home care agency alongside a residential home, the buy-side questions rhyme but are not identical, and we cover the agency version in our guide on buying a domiciliary care agency.
Asset purchase or share purchase: the decision that changes everything
The first real decision is whether you buy the company that runs the home, a share purchase, or buy the business and property out of it, an asset purchase. A share purchase keeps the same legal entity, so the CQC registration and the trading history continue, and you inherit every liability along with them. An asset purchase gives you a clean start but forces a brand new CQC registration before you can trade.
In a share purchase you buy the shares of the company that owns and runs the home. The company continues exactly as it was. Its CQC registration continues, its contracts continue, its employees stay put, and its bank account and history stay attached. That sounds simple, and it is why sellers usually prefer it. The catch is that you also inherit everything the company owes and everything it did wrong: unpaid PAYE, a pension deficit, a minimum wage under-payment across years of sleep-in shifts, an unresolved CQC enforcement action or a live employment claim. Share deals are therefore built on heavy warranties and indemnities, promises from the seller that the numbers are true and that they will pay for named problems that surface later.
In an asset purchase you buy the trade and the property directly, usually into a new company you set up for the purpose, sometimes called a NewCo or a special purpose vehicle (SPV). You leave the seller's old company, and most of its history, behind. That is cleaner on liability. The price is that a CQC registration cannot come with an asset deal, so you must register as a new provider before completion, and the staff transfer to you automatically under employment protection rules we come to below.
Buyers usually want an asset purchase for the clean start. Sellers usually want a share purchase because it sells the whole company in one move and can qualify for Business Asset Disposal Relief on the gain. That tension is the heart of most care home negotiations, and how it resolves changes your tax, your risk and your timeline. The flow below is how we frame the first decision with a client.
What due diligence on a care home actually checks
Care home due diligence goes well beyond the last three years of accounts. It tests the fee income by payer, the real occupancy trend, the staffing cost including agency, the CQC rating and any enforcement history, and whether the seller has been paying the minimum wage correctly across sleep-in and night cover. Each of those can move the price or kill the deal.
Start with the income, because it is rarely as clean as the sales pack suggests. A home earns from several payers at once: local authority placements at council-set rates, NHS-funded nursing care (FNC) contributions for residents who need nursing, Continuing Healthcare where the NHS funds the whole package, and private self-funders who often pay more and sometimes subsidise the rest. We split the fee income by payer, check the actual rates against the current contracts, and look hard at debtor days, because councils and the NHS pay slowly and a home can be profitable on paper while starved of cash.
Then the occupancy. Sellers tend to quote profit at or near peak occupancy on a good month. We rebuild it on trailing twelve-month occupancy, because an empty bed is lost income that never comes back, and a home that averages 82 percent occupancy is a very different business from one the brochure implies runs at 95 percent. Voids, the periods when a bed sits empty between residents, are where a lot of the real margin quietly leaks away.
Staffing is the third pillar and usually the biggest cost line. We look at the agency spend as a percentage of the total wage bill, because heavy reliance on agency staff signals a recruitment problem and destroys margin at the same time. We also check minimum wage compliance across sleep-in shifts and waking nights, since this is a well-known HMRC enforcement area for the sector and an under-payment can become a six-figure back-pay liability that follows the company on a share deal. The Skills for Care workforce data is a useful external benchmark for pay and turnover when we sense-check what the seller is telling us.
Finally the regulator and the records. We read the latest CQC inspection report and rating in full, look for any warning notices or conditions, and reconcile the reported income back to the care management system and the bank so the numbers are real rather than asserted. The single most common finding is that the headline profit was built on a good quarter and does not survive being rebuilt on a full trailing year.
CQC registration, TUPE and the day-one realities
On an asset purchase you must be registered with the CQC as the new provider before completion, because the registration never transfers with the sale, and every member of staff transfers to you automatically under TUPE on their existing terms. These two facts shape the whole completion plan.
The CQC point is the one buyers underestimate most. A registration is granted to a specific legal entity for a specific regulated activity at a specific location. Buy the business as an asset and you are a new entity, so you apply as a new provider, evidence a registered manager, and satisfy the CQC on financial viability under Regulation 13 of the registration regulations, which in practice means a business plan and a cashflow forecast that show the home can be run safely and sustainably. That application typically takes ten to sixteen weeks, and completion cannot sensibly happen until it is granted. The government and CQC guidance on how to buy, sell or transfer a registered business sets out the mechanics. The viability evidence is close cousin to the pack a brand new home prepares, which we break down in our guide to the CQC cashflow forecast for care home registration.
One nuance that cuts both ways: the location's inspection history and rating follow the home. Under the CQC's continuation of regulatory history, a new provider taking over a location inherits its previous rating and report, so a poor rating does not vanish simply because ownership changed. That is a due-diligence red flag on the way in and a live improvement obligation on day one.
Then TUPE. The Transfer of Undertakings (Protection of Employment) Regulations move every employee to you automatically on their existing terms and continuous service when you buy the business as a going concern. You inherit their contracts, their accrued holiday, their pension arrangements and, crucially, their pre-transfer liabilities unless the deal specifically indemnifies you against them. Payroll has to be ready to run the same staff, on the same terms, on day one, with a new PAYE scheme and continuity of pension. We cover the mechanics of that handover in detail in our guide to the TUPE transfer for a care home acquisition. Get the payroll cutover wrong and your first week as an owner starts with unpaid carers, which is the fastest possible way to lose the staff you just bought.
The tax and stamp duty on buying a care home
A care home is commercial property, so the freehold attracts non-residential Stamp Duty Land Tax at 0 percent to 5 percent, not the higher residential rates, and on a £700,000 freehold that is £24,500. Stamp Duty Land Tax, or SDLT, is the tax you pay on buying property in England and Northern Ireland.
The non-residential bands are straightforward. You pay nothing on the first £150,000, 2 percent on the slice from £150,001 to £250,000, and 5 percent on everything above £250,000. On a £700,000 care home freehold that works out as £0, plus £2,000, plus £22,500, so £24,500 in total. A care home with a manager's flat attached is treated as mixed-use, which still sits on these commercial rates for the whole price rather than the steeper residential scale, so the mixed-use point usually works in a buyer's favour here. HMRC sets out the current bands in its guidance on non-residential and mixed-use SDLT rates.
A share purchase side-steps SDLT entirely. You are buying shares, not land, so the charge is stamp duty on shares at 0.5 percent instead. On the same £700,000 of underlying property that is £3,500 against £24,500, a real saving, but remember the trade-off: shares carry the company's whole history and every latent liability with them. The stamp duty saving is often the smallest number in the room next to a minimum wage back-pay exposure or a pension deficit.
Two more tax points decide what the price is really worth to you. First, the price on an asset deal has to be apportioned across the property, the goodwill, the fixtures and the stock, and that split matters, because goodwill you pay for is generally not deductible against corporation tax, while an agreed election on the fixtures preserves capital allowances on the integral features inside the building. Second, watch the seller's own position: Business Asset Disposal Relief (BADR), the relief that taxes a qualifying business sale at a reduced Capital Gains Tax rate, rose to 14 percent for 2025/26 and to 18 percent from 6 April 2026, so a seller who was racing to complete before that jump may move on price or speed. If you are also modelling the cost of building rather than buying, our guide on how much it costs to start a care home sets out the alternative.
The acquisition journey: heads of terms to completion
A care home purchase usually runs three to six months from heads of terms to completion, and the long pole is almost always the CQC new-provider registration, not the legal work or the funding. Plan the whole timetable backwards from the registration, not forwards from the offer.
The sequence starts with heads of terms and a period of exclusivity, the agreement in principle that lets you commit money to due diligence without the seller talking to other buyers. Financial, legal, property and regulatory due diligence then run in parallel over roughly two months. The CQC application should start as early as the deal allows and runs alongside everything else, because it is the item most likely to hold up completion. Financing and SDLT planning sit in the same window. Exchange of contracts commits both sides, and completion is the day the money moves, the payroll cuts over and the staff transfer to you under TUPE.
Here is how the three common approaches to buying a care home actually compare:
| What the deal needs | Conveyancer only | Generic accountant | LOYALS care specialist |
|---|---|---|---|
| Rebuilds profit on trailing occupancy and real agency cost | ✗ | ● If asked | ✓ Standard on every deal |
| Checks fee income by payer (LA, NHS FNC, CHC, private) | ✗ | ✗ | ✓ Contract by contract |
| Quantifies sleep-in minimum wage exposure | ✗ | ● | ✓ And seeks an indemnity |
| Plans CQC re-registration and Regulation 13 viability | ✗ | ✗ | ✓ Started early |
| Structures asset vs share for tax and liability | ● Legal only | ● | ✓ Tax and TUPE modelled |
| Open Mon to Sat for urgent completion-week calls | ✗ | ✗ Mon to Fri 9 to 5 | ✓ 10am to 7pm Mon to Sat |
This is why buyers who are serious about a care home bring in a care specialist alongside the solicitor, not instead of one.
What this means for you: buying a care home without nasty surprises
If you are serious about a care home, get the deal structure and the CQC timeline decided before you sign heads of terms, because both are far harder to change later. The rest is sequencing, and most of it is time sensitive.
- Decide asset versus share early. It drives your tax, your liability and whether you need a fresh CQC registration. Model both before you commit to a structure in the heads of terms.
- Start the CQC application as soon as the deal allows. A new-provider registration of ten to sixteen weeks is usually what gates completion, so begin it in parallel with due diligence, not after exchange.
- Rebuild the seller's profit. Insist on trailing twelve-month occupancy and the real agency run-rate, not a peak-month EBITDA. The number almost always moves, and that moves the price.
- Quantify and indemnify the staffing risks. Get sleep-in minimum wage and holiday pay exposure measured, then covered by warranties and indemnities on a share deal.
- Apportion the price properly. Split it across property, goodwill and fixtures, and agree the fixtures election so you keep the capital allowances inside the building.
- Line up working capital for the payment gap. Councils and the NHS pay in arrears, so budget the cash to cover wages and running costs before the fee income arrives.
None of this is exotic. It is the difference between buying a care home that runs from day one and buying a set of problems with a building attached. You can pressure-test a specific care home purchase in a free call with LOYALS before you commit a penny, and it is a great deal cheaper than discovering the occupancy was overstated after you own it.