Care Operator Tenant: Finding the Right UK Care Operator Tenant

A practical guide for UK landlords, investors and property owners looking for a suitable care operator tenant for specialist care property

A care operator tenant can provide a long-term solution for landlords and investors who own property suitable for a care home, supported living service, specialist accommodation or another healthcare-related use. Finding the right operator, however, involves more than simply finding a tenant that can occupy the building.

The operator needs to match the property's location, layout, planning position, accommodation, condition and intended care model. The lease structure, financial position, regulatory requirements and proposed refurbishment should also be considered before an agreement is completed.

For landlords, careful operator selection can help create a more sustainable tenancy and reduce the risk of unsuitable use, costly alterations or future vacancy.

What is a care operator tenant?

A care operator tenant is a care provider or specialist organisation that leases a property from a landlord and operates a care-related service from the premises.

Depending on the property and business model, the tenant could operate:

• A residential care home

• A nursing home

• Supported living

• Supported accommodation

• Specialist supported housing

• Children's residential care

• Dementia care

• Mental health accommodation

• Learning disability services

• Rehabilitation services

• Specialist healthcare accommodation

• Other regulated care services

The exact regulatory position depends on the service being provided. In England, organisations carrying on regulated activities generally need to register with the Care Quality Commission, and the legal entity carrying on the regulated activity is responsible for registration rather than the property itself.

Why landlords look for care operator tenants

A suitable care operator can allow a landlord to retain ownership of a specialist property while another organisation manages the day-to-day care service.

This can be particularly relevant where the property has been designed or adapted for care use and would be difficult to let to a conventional commercial tenant.

A landlord may be looking for an operator because they own:

• An existing care home

• A former care home

• A former nursing home

• A large residential property

• A specialist supported living property

• A former healthcare building

• A newly developed care facility

• A vacant care property

• A property requiring refurbishment before occupation

The objective is usually to identify an operator whose business model and care requirements are compatible with the building.

Start with the property before searching for a tenant

Before approaching care operators, the landlord should establish exactly what the property can offer.

Important considerations include:

• Number of bedrooms

• Number of bathrooms

• En-suite facilities

• Communal areas

• Kitchen facilities

• Staff areas

• Treatment or therapy rooms

• Accessibility

• Fire safety arrangements

• Parking

• Garden or outdoor space

• Lifts

• Storage

• Current building condition

• Existing planning use

A clear property brief makes it easier to approach operators that are genuinely suitable rather than generating enquiries from businesses whose requirements do not match the building.

Match the care operator to the property

Not every care operator will want the same type of premises.

For example, a dementia care operator may require appropriate circulation, secure outdoor areas, accessible accommodation and suitable communal spaces. A supported living provider may require a different configuration, particularly where residents have greater independence.

Similarly, a specialist rehabilitation provider may require therapy areas and accessible facilities that would be less important to another care model.

The landlord should therefore understand the operator's intended service before agreeing to a lease.

Check the operator's experience

A prospective care operator tenant should be assessed on more than the rent they are prepared to pay.

Relevant questions can include:

• How long has the operator been established?

• What type of care does it provide?

• How many services does it operate?

• Does it have experience with similar properties?

• What areas does it currently operate in?

• Does it have experienced management?

• What is its proposed service model?

• Does it have the resources to undertake required refurbishment?

• Does it have a realistic business plan for the property?

An operator with experience in a particular care model may understand the practical requirements of the property more effectively than an organisation entering the sector for the first time.

Check the operator's CQC position

Where the proposed service involves CQC-regulated activity in England, the operator's registration position should be examined as part of the landlord's due diligence.

CQC states that providers must register if they plan to provide regulated activity in England, and regulated activity cannot legally be carried on without the appropriate registration.

This does not mean that every care operator needs the same registration. The required regulated activities depend on the actual services being provided. CQC also explains that a provider may need to register for more than one regulated activity depending on its service model.

Landlords should therefore avoid assuming that a previous operator's registration automatically covers a new tenant.

Understand the property and CQC location relationship

The relationship between the property and the operator's regulatory arrangements can also be important.

CQC describes locations as places where regulated activities are provided or managed. For residential services, a location can include premises where people live and receive care or treatment. For supported living and domiciliary care, the relevant location may instead be the premises from which the provider organises or manages the regulated activity.

This distinction can be relevant when a landlord is considering a care operator tenant for a particular property.

The tenant should establish its own regulatory requirements rather than relying solely on the property's previous use.

Check planning and lawful use

Planning should be investigated before agreeing the proposed occupation.

The landlord should establish:

• Current lawful use

• Previous use

• Existing planning permissions

• Planning conditions

• Any restrictions affecting the property

• Whether the proposed care model is compatible with the existing use

• Whether a change of use may be required

• Whether proposed alterations require planning permission

A former care home may appear immediately suitable for another care operator, but the proposed service and physical changes should still be assessed independently.

This is particularly important where the incoming operator wants to change the resident profile, increase capacity, alter the layout or introduce additional facilities.

Agree who pays for refurbishment

A care operator tenant may require alterations before the service can open.

Potential works could include:

• Accessible bathrooms

• Bedroom upgrades

• Fire safety improvements

• Emergency lighting

• Kitchen refurbishment

• New flooring

• Decoration

• Doors and access controls

• Alarm systems

• Accessibility improvements

• Staff facilities

• Communal area upgrades

• Garden improvements

The lease should clearly establish responsibility for these works.

Depending on the arrangement, the landlord may undertake the works before occupation, the operator may fund them, or the parties may agree a contribution or refurbishment allowance.

Consider the lease structure carefully

A care operator tenancy can involve a substantial property commitment, making the lease structure important.

Points to consider include:

• Lease length

• Rent

• Rent review mechanism

• Break clauses

• Repair obligations

• Insurance

• Service charges

• Assignment and subletting

• Alteration rights

• Planning responsibilities

• Compliance responsibilities

• Reinstatement obligations

• Security of tenure

• Dilapidations

The appropriate structure will depend on the property, operator, investment objectives and proposed care model.

Professional legal and property advice should be obtained before committing to the final lease.

Assess the operator's financial position

The ability to operate the service successfully is just as important as the proposed rent.

Landlords may want to examine:

• Company accounts

• Financial forecasts

• Funding arrangements

• Existing property commitments

• Trading history

• Proposed occupancy levels

• Staffing assumptions

• Refurbishment budget

• Rent affordability

• Business plan

A financially attractive headline rent may not provide a secure tenancy if the operator has underestimated the costs of opening and running the service.

Finding a care operator tenant for a vacant care property

Vacant care properties can require a different marketing approach from conventional commercial property.

A landlord should present the property in a way that answers the questions care operators are likely to ask.

The marketing information could include:

• Property size

• Number of bedrooms

• Current use

• Previous use

• Planning position

• Facilities

• Accessibility

• Parking

• Outdoor space

• Location

• Potential capacity

• Available refurbishment information

• Lease expectations

For specialist properties, targeted operator sourcing can be more useful than relying entirely on general commercial property advertising.

Finding a tenant for a former care home

Former care homes can attract interest from operators looking for established specialist accommodation.

However, the landlord should identify why the previous operation ended and assess whether the property remains suitable.

Issues could include:

• Outdated facilities

• Building maintenance

• Fire safety

• Accessibility

• Planning restrictions

• Poor layout

• Insufficient communal space

• High refurbishment costs

• Location challenges

• Changes in local care demand

A former care home with the right fundamentals may be repositioned successfully, but the business case should be based on its current condition and future use rather than simply its history.

Care operator tenants for supported living property

Supported living can involve a different property model from a conventional care home.

CQC explains that supported living services can be managed from a location such as an office, while the individual homes where people live are not usually the provider's CQC location under the relevant location rule.

For landlords, this makes it important to understand the precise arrangement between the accommodation provider, care provider and residents.

The property, tenancy arrangements and care service should be considered together when assessing the proposed operator.

Consider London and regional care markets

The right care operator tenant may depend heavily on location.

In London, landlords may need to consider:

• Borough planning policies

• Property values

• Transport accessibility

• Parking limitations

• Local care demand

• Staff recruitment

• Residential surroundings

• Building density

• Development restrictions

Outside London, larger properties and sites with substantial grounds may provide different opportunities for care operators.

Fraser Bond can help landlords assess the property within its local market rather than marketing it as a generic commercial building.

Off-market care operator sourcing

Some landlords prefer to approach suitable operators privately rather than placing a property on the open market.

Off-market sourcing can be useful where:

• The property is sensitive

• The landlord wants confidentiality

• The property requires a specialist operator

• The building is vacant

• Refurbishment is required

• The landlord wants to test operator demand before investing further

• A long-term lease is preferred

A targeted approach can focus on operators whose existing services and business plans are compatible with the property.

What landlords should prepare before approaching operators

A landlord seeking a care operator tenant should ideally prepare a clear information pack.

This can include:

• Property particulars

• Floor plans

• Photographs

• EPC

• Planning history

• Building information

• Previous use

• Fire safety documentation

• Asbestos information where applicable

• Accessibility information

• Existing warranties

• Proposed lease terms

• Refurbishment expectations

• Asking rent

• Any available surveys

Having this information ready can make operator discussions more efficient and help potential tenants assess the opportunity.

Working with Fraser Bond

Finding a care operator tenant requires a combination of property knowledge, operator sourcing, commercial assessment and practical due diligence.

Fraser Bond can support landlords, investors and property owners looking to identify suitable care operators for properties across London and the UK.

Support can include:

• Care operator sourcing

• Property marketing

• Off-market operator introductions

• Property assessment

• Acquisition and leasing advice

• Planning coordination

• Refurbishment planning

• Contractor coordination

• Building works

• Property management

• Investment assessment

• Specialist care property consultancy

The objective is to match the property with an operator whose service model, financial requirements and operational needs are compatible with the asset.

Finding the right care operator tenant

A care operator tenant can provide a valuable long-term opportunity for landlords with suitable specialist property, but operator selection should be approached carefully.

The property should be assessed first, followed by the operator's care model, experience, regulatory position, financial capacity, refurbishment requirements and proposed lease structure.

For landlords with a vacant care home, former healthcare building, supported living property or specialist residential asset, targeted operator sourcing can help identify potential tenants that are better matched to the property.

Fraser Bond can assist with sourcing, assessing and preparing specialist care property opportunities across London and the wider UK.