Lease Property to CQC Registered Care Company - What Landlords Should Know

Learn how to lease property to a CQC registered care company, including property suitability, CQC requirements, planning, lease terms, rent, refurbishment and operator due diligence.

Landlords with suitable residential properties, former care homes or specialist accommodation may consider a lease property to CQC registered care company arrangement as an alternative to conventional residential letting.

Leasing to an established care company can provide a structured relationship with an operator that intends to use the property for a regulated care service. However, the fact that a company is CQC registered does not by itself mean that any property can be used for care.

The landlord needs to understand the proposed service, property requirements, planning position, CQC arrangements, lease obligations and financial strength of the operator before entering into a long-term agreement.

CQC states that providers carrying on regulated activities in England must register, and the registration process identifies the regulated activities and locations from which those activities are carried on. It is an offence to carry on a regulated activity without the required registration.

What Does Leasing to a CQC Registered Care Company Mean?

A landlord may grant a lease to a care company that intends to operate its service from the property.

Depending on the business model, this could involve:

• A residential care home

• A nursing care service

• Specialist residential care

• Supported living

• A specialist living service

• Another regulated adult social care service

The legal and operational structure can vary significantly between these models.

For example, CQC's current location guidance states that a care home where people live as their main or sole residence and receive care or treatment can constitute a CQC location. In contrast, individual houses used in supported living are generally not CQC locations because the accommodation and care arrangements are separate.

This distinction should be established before a landlord agrees to the proposed use.

Why Care Companies May Lease Property

A care provider does not necessarily need to own the property from which it operates.

Leasing can allow an operator to secure suitable premises without purchasing the underlying property.

Depending on the provider, the requirements may include:

• Large residential houses

• Former care homes

• Specialist accommodation

• Properties with multiple bedrooms

• Accessible homes

• Properties suitable for conversion

• Existing care facilities

• Development or refurbishment opportunities

For the landlord, the arrangement can create an opportunity to work with an established operator rather than relying on individual residential tenants.

The commercial terms still need to be assessed carefully, particularly where the proposed lease is long term.

What Properties Are Suitable for Care Companies?

There is no single property specification for every care company.

A provider may assess:

• Number of bedrooms

• Number of bathrooms

• Internal layout

• Communal areas

• Accessibility

• Parking

• Outdoor space

• Location

• Local transport

• Nearby healthcare facilities

• Local amenities

• Fire safety

• Property condition

• Potential for adaptations

The intended residents are also important.

A property designed for older people with mobility requirements may have different needs from accommodation intended for adults with learning disabilities or other specialist support requirements.

The landlord should therefore obtain the operator's property specification before assuming that a particular house is suitable.

CQC Registration Does Not Automatically Cover the Property

One of the most important points for landlords is that CQC registration is not simply a certificate attached to a building.

CQC registers the provider for specified regulated activities and identifies the relevant locations from which those activities are carried on or managed. If a provider adds or removes a location, it may need to apply to vary its registration conditions.

Consequently, a landlord should not assume that because a previous care operator used the property, a new care company can automatically operate from the same premises under the previous arrangements.

The incoming provider needs to establish its own regulatory position.

Check the Care Company's CQC Status

Before signing a lease, landlords should carry out due diligence on the proposed tenant.

Check:

• Provider name

• CQC registration

• Regulated activities

• Registered locations

• Inspection information

• Registered manager arrangements where relevant

• Existing services

• Company history

• Financial position

• Experience operating similar properties

• Existing landlord references

CQC provides public information about providers and locations, including historical information about locations that have been deregistered or taken over by another provider.

CQC's registration guidance also makes clear that providers need appropriate premises and supporting arrangements in place before applying, and the regulator can refuse an application where premises are not suitable.

Planning Permission Is a Separate Issue

A CQC registered care company may have the appropriate regulatory status while the proposed property use still requires planning consideration.

Planning and CQC registration are separate matters.

The landlord should establish:

• Existing lawful use

• Proposed care use

• Number of residents

• Staffing arrangements

• Whether there will be a material change of use

• Proposed alterations

• Parking requirements

• Local planning restrictions

• Whether additional planning permission is required

Class C2 covers the provision of residential accommodation and care to people in need of care, as well as hospitals and nursing homes, but the correct planning classification depends on the actual use and circumstances.

Do not assume that every house leased to a care company automatically becomes a C2 property.

A planning professional should assess the specific property and proposed operation where there is uncertainty.

Care Home and Supported Living Are Different

A landlord should ask the care company to explain exactly how residents will occupy the property.

In a care home, accommodation and care can be contractually linked, and CQC identifies the care home as a location under its registration framework.

Supported living can work differently. CQC explains that individual supported living houses are generally not CQC locations where residents live in their own accommodation and care is managed from another location.

This means the phrase "CQC registered care company" alone is not enough to determine the property's regulatory or planning requirements.

What Should the Lease Cover?

A specialist care property lease should clearly define the responsibilities of the landlord and operator.

Important provisions can include:

• Lease term

• Rent

• Rent reviews

• Deposit

• Guarantees

• Break clauses

• Assignment

• Subletting

• Repairs

• Structural maintenance

• Insurance

• Utilities

• Business rates

• Alterations

• Refurbishment

• Compliance

• Planning responsibilities

• Regulatory responsibilities

• Reinstatement

• Default

• Termination

A solicitor experienced in commercial property and care-sector leases should review the agreement before it is completed.

How Long Should the Lease Be?

The appropriate lease length depends on the property, operator and investment structure.

A care company may seek:

• Short-term occupation

• Medium-term leases

• 10-year leases

• 15-year leases

• 20-year leases

• Longer agreements

A longer lease can provide greater contractual certainty, but it also means the landlord may be committed to the arrangement for a substantial period.

The landlord should therefore consider the operator's financial strength and the quality of the lease provisions rather than focusing solely on the number of years.

Rent and Rent Reviews

The proposed rent should be assessed against the property's market value and the operator's ability to sustain the lease.

Possible structures include:

• Fixed rent

• Annual rent reviews

• Inflation-linked reviews

• Open-market reviews

• Rent-free periods

• Refurbishment periods

• Incentive arrangements

The landlord should also establish whether the provider's proposed rent is based on its own commercial resources, service income or other funding arrangements.

A high rent on paper is not useful if the operator cannot sustain its obligations.

Who Pays for Repairs?

Repairing responsibilities should be agreed before signing.

Depending on the lease, the care company may be responsible for routine maintenance while the landlord retains responsibility for certain structural or capital works.

Areas to clarify include:

• Roof

• Structure

• Windows

• Heating

• Plumbing

• Electrical systems

• Fire safety equipment

• Internal decoration

• External areas

• Garden maintenance

• Routine repairs

• Major works

The lease should clearly distinguish between day-to-day maintenance and major capital expenditure.

Preparing a Property for a Care Company

A property may require refurbishment before the care provider can occupy it.

Potential works include:

• Accessible bathrooms

• Additional bathrooms

• Kitchen upgrades

• Fire safety improvements

• Electrical upgrades

• Heating improvements

• Flooring

• Door modifications

• Internal reconfiguration

• Accessibility improvements

• Security measures

CQC's registration guidance states that providers must have their locations and staff ready before submitting an application and may need to demonstrate that premises are suitable.

Landlords should agree in advance who pays for works and whether the operator is permitted to make alterations.

Former Care Homes Can Be Attractive

A former care home may have features that make it potentially suitable for another operator.

These could include:

• Multiple bedrooms

• Communal living areas

• Specialist bathrooms

• Accessibility features

• Staff facilities

• Existing fire safety infrastructure

• Parking

• Established care-related layout

However, previous use does not guarantee that a new operator can immediately use the building for the same purpose.

The incoming care company should undertake its own regulatory, planning and operational assessment.

What Happens If the Provider Loses Its Registration?

This is an important issue in a long-term lease.

The landlord should consider what happens if the operator:

• Loses its CQC registration

• Stops providing the regulated activity

• Cannot pay rent

• Becomes insolvent

• Breaches the lease

• Wants to surrender the property

• Assigns the lease

• Changes its business model

The lease should address these scenarios appropriately.

CQC states that carrying on a regulated activity without the required registration is an offence.

The landlord therefore needs to understand how the lease operates if the provider's regulatory position changes.

Due Diligence Before Leasing to a Care Company

Before accepting a proposal, ask the operator:

• What regulated activity will be provided?

• Who will live at the property?

• How many residents are expected?

• What staffing will be provided?

• Is the company currently CQC registered?

• Which regulated activities does it provide?

• What locations does it currently operate?

• Has it operated similar properties?

• What lease term does it require?

• Who will pay for adaptations?

• Who will maintain the property?

• What security can it provide?

• What happens if its registration changes?

The answers can help determine whether the proposed arrangement is appropriate for the property.

How Fraser Bond Can Help

Fraser Bond can support property owners and investors looking to lease property to a CQC registered care company.

Depending on the project, support can include:

• Property sourcing

• Property acquisition

• Investment advisory

• Property lettings

• Care property consultancy

• Development consultancy

• Refurbishment planning

• Building works

• Contractor coordination

• Property management

• Repairs and maintenance

• Compliance support

For landlords with large houses, former care homes or properties that could potentially be adapted for specialist use, Fraser Bond can help assess the property and coordinate the wider property requirements.

A Practical Route for Landlords

If you are considering leasing your property to a CQC registered care company, work through the transaction in stages.

1. Assess the property

Review the location, layout, condition, size and potential use.

2. Establish the intended care model

Find out exactly what service the operator plans to provide.

3. Check planning

Establish whether the proposed use requires planning permission or other approvals.

4. Verify the provider

Review CQC information, company history, financial strength and relevant experience.

5. Agree the commercial terms

Discuss rent, lease length, rent reviews, repairs, insurance and security.

6. Agree refurbishment requirements

Identify adaptations and establish who will pay for them.

7. Obtain professional advice

Have the proposed lease and planning arrangements reviewed by appropriate professionals.

8. Complete the lease

Make sure the responsibilities of the landlord and care company are documented clearly.

Lease Your Property to a CQC Registered Care Company With Fraser Bond

Leasing property to a CQC registered care company can provide landlords with an alternative route into specialist property lettings.

However, the provider's registration is only one part of the assessment. The proposed care service, planning position, property suitability, lease structure, rent, repairs, refurbishment requirements and operator strength should all be considered before the landlord commits.

Fraser Bond can support property owners and investors with property sourcing, acquisition, lettings, investment advisory, development consultancy, refurbishment, building works, property management and ongoing property support.

If you have a property that could be suitable for a CQC registered care company, Fraser Bond can help you assess the opportunity and explore the appropriate leasing strategy.