Care Property Sale and Leaseback UK - Release Capital While Continuing to Operate
A care property sale and leaseback allows a care operator or property owner to sell a care home or specialist care property to an investor while taking a lease of the property back and continuing to operate from the same premises.
The structure can provide access to capital tied up in the freehold without requiring the care business to relocate. In a typical transaction, the investor becomes the property owner and the care operator becomes the tenant under a new lease.
Sale and leaseback transactions are an established form of commercial property financing. GOV.UK describes the arrangement as selling a freehold interest and simultaneously leasing the property back, providing an initial cash injection while allowing the organisation to continue operating from the premises.
What Is a Care Property Sale and Leaseback?
A care property sale and leaseback separates ownership of the property from operation of the care business.
The process generally works as follows:
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The care operator owns the care property.
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The property is marketed to a suitable investor.
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The investor purchases the property.
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The operator receives the agreed sale proceeds.
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The operator takes a lease of the property from the investor.
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The care business continues operating from the same premises.
The arrangement can apply to care homes, nursing facilities and other specialist care properties, depending on the circumstances of the transaction.
The operator therefore gives up ownership of the freehold but retains occupation under the lease.
Why Sell and Lease Back a Care Property?
The main reason for considering a sale and leaseback is to release capital from the property.
A care operator may have substantial value tied up in a freehold property while needing capital for other business objectives.
Potential uses for released capital can include:
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Acquiring another care home
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Expanding the care business
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Refurbishing existing facilities
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Funding development projects
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Repaying certain borrowing
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Supporting succession planning
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Funding partner retirement
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Investing in staff, equipment or operations
For example, an established care operator in London may own a purpose-built care home but want to acquire another facility. Instead of selling the operating business, the owner could explore selling the property and leasing it back.
This can allow the business to remain in the same location while accessing capital from the property.
How Does a Care Property Sale and Leaseback Work?
Property assessment
The first stage is understanding the property itself.
Factors can include:
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Location
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Freehold ownership
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Current use
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Property condition
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Number of bedrooms
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Facilities
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Accessibility
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Planning position
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Existing regulatory arrangements
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Investment potential
A specialist care property valuation can help establish a realistic market value.
Operator assessment
The financial strength of the care business is also important.
An investor is not simply purchasing bricks and mortar. In a leaseback arrangement, the purchaser is relying on the tenant to meet its rental obligations over the agreed lease period.
Investors may therefore examine the operator's trading history, financial position, occupancy, management experience and regulatory position.
Sale price and lease terms
The sale price and leaseback terms need to be negotiated together.
Important considerations include:
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Purchase price
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Initial rent
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Lease length
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Rent reviews
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Repair obligations
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Insurance
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Permitted use
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Alteration rights
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Assignment
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Break clauses
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End-of-lease obligations
GOV.UK notes that sale and leaseback rents can reflect the financial structure of the transaction rather than simply representing open-market rental evidence, making careful analysis of the lease important.
Completion
Once the transaction completes, the investor becomes the property owner and the care operator continues occupying the premises as tenant.
Long-Term Care Property Leasebacks
Care property sale and leaseback transactions can involve long-term leases because the operator needs security of occupation and the investor is purchasing an income-producing property.
The exact term depends on the transaction.
For example, in December 2025, Christie & Co reported a £45 million Scottish care home sale and leaseback involving three operational homes acquired by Target Healthcare. The properties were secured under 35-year leases with inflation-linked rent reviews.
This demonstrates one possible structure rather than a standard lease term for every care property transaction.
The appropriate length should reflect the property, operator, rent, investment requirements and negotiated commercial terms.
What Should the Care Property Lease Include?
The lease is central to the transaction because the operator will no longer own the freehold.
Rent
The operator needs to understand the starting rent and how it will be reviewed during the lease.
Rent reviews
The parties should establish when reviews take place and what mechanism will be used.
Repairs and maintenance
The lease should clearly establish whether the tenant or landlord is responsible for:
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Internal repairs
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Structural repairs
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External maintenance
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Plant and equipment
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Replacement works
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Compliance-related works
Insurance
Responsibility for buildings insurance and other relevant policies should be documented.
Permitted use
The lease should clearly define the property's permitted care use.
The operator should not assume it can substantially change the nature of the service without landlord consent or any necessary planning or regulatory approvals.
Alterations
Care properties may require adaptations over time. The lease should establish which alterations require consent and who pays for them.
Assignment and subletting
The operator should understand whether it can transfer the lease or allow another organisation to occupy the premises.
Break clauses
Where appropriate, break provisions can provide an agreed mechanism for ending the lease before its full term.
Reinstatement
If substantial alterations are made during the lease, the agreement should establish what happens to them when the lease ends.
What Are the Benefits for a Care Operator?
Release capital from the freehold
The operator can convert property value into cash without necessarily selling the care business.
Remain in the same building
Residents, staff and operations can potentially remain in place rather than moving to another facility.
Fund expansion
Released capital may allow an established operator to pursue other opportunities.
Separate property ownership from operations
The arrangement can create a clearer distinction between the property asset and the care operating business.
Potentially support succession planning
A sale and leaseback may form part of a wider strategy for an owner approaching retirement or restructuring their involvement in the business.
A real-world example illustrates how proceeds can be redeployed. A care organisation reported selling a care home under a sale and leaseback arrangement in 2024 and using part of the proceeds towards acquiring another care home and development site.
What Are the Risks?
Selling the freehold also changes the operator's long-term position.
The care business should consider:
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Loss of freehold ownership
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Loss of future property appreciation
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Long-term rental commitments
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Rent increases
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Repair obligations
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Restrictions on alterations
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Restrictions on assignment
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Consequences of lease breaches
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Future affordability of the rent
The amount of capital released should therefore not be considered in isolation.
A care operator needs to assess whether the business can sustainably meet the rent throughout the proposed lease term.
GOV.UK guidance on sale and leaseback specifically highlights the need to consider affordability over a long period, including the possibility of cash flow deterioration or increased lease payments.
Care Property Sale and Leaseback for Investors
The arrangement can also be attractive from an investor's perspective.
The investor acquires a property that already has an occupier and enters into a contractual landlord-tenant relationship with the care operator.
Potential investment considerations include:
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Property location
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Building quality
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Lease length
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Rental income
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Tenant covenant
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Operator financial strength
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Care home performance
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Regulatory position
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Planning
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Future property demand
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Maintenance obligations
The strength of the tenant can be particularly important because the property's rental income depends on the operator meeting its obligations.
The UK's care property investment market has also seen large institutional transactions. In 2025, for example, Welltower acquired portfolios of care home properties previously owned and operated by several major care providers, with new operators taking over day-to-day management. The CMA subsequently investigated competition implications in a number of local areas.
Sale and Leaseback vs Selling the Care Business
A care property sale and leaseback is not necessarily the same as selling the entire care business.
With a property sale and leaseback:
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The property is sold.
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The operator becomes the tenant.
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The operating business can remain with the existing owner.
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The business continues operating from the same premises.
With a sale of the care business, ownership or control of the operating company may also change.
This distinction is important when considering retirement, expansion or restructuring because an owner may want to release property capital without giving up the operating business.
Tax and Accounting Considerations
Sale and leaseback transactions can have specific tax and accounting implications.
HMRC's current guidance states that accounting treatment depends on the relevant accounting framework and whether the transaction qualifies as a sale. Under IFRS 16 and the revised FRS 102 framework, the seller-lessee can have specific accounting treatment for the underlying asset and leaseback.
HMRC also has specific rules concerning certain tax reliefs connected with rents paid following the sale and leaseback of land.
Care operators should therefore obtain appropriate legal, tax and accounting advice before committing to a transaction.
Is a Care Property Sale and Leaseback Right for You?
A sale and leaseback needs to be assessed on the individual circumstances of the property and care business.
It may be worth exploring where a care operator:
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Owns a valuable freehold
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Wants to release capital
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Has an established operating business
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Wants to remain at the current location
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Can support the proposed rent
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Is considering expansion or succession planning
However, giving up freehold ownership is a significant decision.
The operator should compare the immediate capital release with the long-term rental obligations and the future value that could otherwise have remained with the business.
How Fraser Bond Can Help
Fraser Bond can support care property owners and operators with specialist property requirements surrounding sale and leaseback transactions.
Depending on the project, support can include:
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Care property assessment
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Investor sourcing
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Property marketing
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Sale and leaseback coordination
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Commercial lease negotiations
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Property valuation coordination
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Refurbishment
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Building works
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Property management
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Maintenance coordination
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Landlord and tenant support
For an owner considering a care property sale and leaseback, the process should begin with a clear assessment of the property's value, the strength of the operating business and the rental commitment that the business can realistically support.
A carefully structured transaction can release capital while allowing the care operator to remain in its existing premises. However, the sale price, lease terms, rent reviews, property responsibilities and long-term financial implications should all be examined before completion.
