The financialization of the care industry has created a massive opportunity for investors to make a well-calculated investment as well as making a positive contribution to society.
In recent years, the United Kingdom government has struggled to keep up with demand for specialist care homes. This has caused a ripple effect in posing a risk to the healthcare needs of senior citizens due to the lack of available rooms in care homes and even lack of quality in some of the already existing homes. The government has reached out to private homes to help bridge the gap in the market, and ensure that elder citizens are receiving the healthcare they need. So what is it specifically about this £16 billion industry that’s interested the financially savvy?
Earlier in 2016, the NHS Trust deficit was calculated at £2.45 billion and in consequence, external investment was deemed necessary to help support the industry and maintain the supply of healthcare needs. Not only are there budget cuts leading to the need of external aid, there is also a continuously growing demand. Currently, 18% of the entire UK population is made up of people over the age of 65, and according to predictions from the Office for National Statistics, the percentile will grow to 24% by 2035.
Regarding industry growth, care home investments is deemed one of the fastest growing sectors globally, consuming over 10% of the GDP in most countries. Age UK, calculated that 16% of retirees are living in poverty with a household income of less that 60% of the average household. This means that there is definitely pressure on government funded care for these citizens that are unable to afford it – making even more room for investors.
What’s the process behind investing in care homes?
Put briefly, the process of investing is composed of the following steps;
The types of care homes vary as well. Investors have the choice of investing in local authority funded care homes or luxury care homes, from specialised care to general care. Your investment manager can advise you on the best opportunities based on the location, current state of the market and the demand of that specific home. Contact HyLife Investments to see which care homes are worth investing in today.
Risks and Rewards
Care homes are a high-yielding asset-backed investment opportunity that provide vital funds to develop highly sought after social infrastructure. The risks are minimal in comparison to other investment products with similar returns due to the nature of the healthcare industry.
Where to Invest
Market Inspector conducted research to evaluate the most in-demand locations for retirement within the UK. The factors used to assess each location included life expectancy rates, access to care, standard of living and crime-rates (to name a few). They considered cities with over 100,000 inhabitants and excluded all the towns and metropolitan boroughs in order to provide an accurate representation of the market. In England, the top two locations for retirement are Dorset and Surrey. These would be ideal areas to invest as Dorset holds the country’s third highest concentration of people over the age of 65 and has been notoriously popular with the retiree demographic. This means that demand for care is incredibly high in this area. Moreover, Surrey is a location in which its citizens receive the highest average annual retirement income, at £21,200 – providing fruitful prospects for those interested in investing in luxury care homes especially.
On the other hand, some of the hottest opportunities for investors are currently located in Wales. This is due to the recent changes in Welsh legislation surrounding the care savings limit. From April 2018, the care savings limit in Wales increased by £10,000 to £40,000. This means that more people are eligible to receive funding for care from local authorities. Meanwhile, citizens in England are required to prove that they have savings or assets amounting to less than £23,250 in order to receive government funding for their care.
HyLife Investment offers calculated, high yielding care home investment opportunities. Here are a few of the government funded, specialised care homes that we have on offer;
PLAS-Y-BRYN – Wales
MANOR PARK – Wales
PONTYPRIDD – Wales
For all three opportunities, the figures and key elements you’ll be looking at as an investor are as follows;
The financials of investing in care homes with HyLife
The process of investing in care homes with HyLife is very straight forward as you have a dedicated portfolio manager to help with the transaction. Post investment your portfolio manager is tasked with keeping you up-to-date with your investment as well as helping you exit the investment should you wish or should another opportunity surface.
The minimum investment amount with care homes is £65,000, this will secure a care home suite in a specialised care facility in the UK. Currently, most of HyLife’s opportunities are based in Wales following the legislation changes in minimum savings limit (described above).
To better understand the financials we’ve put together a timeline of facts and figures:
Invest with HyLife into a specialised care home of your choosing and receive title deeds registered on the UK land registry. Full fact sheets are provided to help identify which care home suits your preferences and portfolio best. All of HyLife’s care homes are operational and therefore the investor receives an immediate income. Apart from the initial legal fee of £1,000, the investor is not charged any additional upfront or ongoing running costs throughout their investment term.
Receive your first returns instalment! The return is fixed at 8-10% dependent on amount invested. If £100k was invested, your first four instalments would be of £2,250 (9% spread across 4 instalments) in year one. In year two and three, your return would rise to 9.5% giving you 4 yearly instalments of £2,375. Finally from year four onwards your investment return would rise to 10% pa divided across four payments throughout the year, ie 2.5% which in this example is £2,500 per quarter.
Your HyLife Investment Portfolio Manager will get in touch asking if you wish to proceed with your investment or if you would like to exit in month 36 (3 years after purchase). If you wish to exit your investment then HyLife will take care of it on your behalf and return 100% of your investment with capital-uplift. If you wish to keep your investment then you will continue to receive quarterly payments.
Other investment amounts:
How to exit a care home investment?
The care home operator offers investors an assured buy-back at year 3, 5, 9, 15 and 20 with increasing capital uplift. However, investors are also able to sell their care home suite to any third party at any time and at their own discretion.
See below the details of the operator’s contractually assured buy-back options:
*capital uplift + total quarterly returns throughout the duration of investment