Property Owners Looking to Lease to Care Operators - A Practical Guide for UK Landlords

Explore what property owners looking to lease to care operators should consider, from property suitability and planning to CQC requirements, lease structures, refurbishment, compliance and finding reliable operators with Fraser Bond support.

Property owners looking to lease to care operators can potentially create long-term commercial relationships while putting suitable residential, healthcare or specialist property to productive use.

Care operators may need a wide range of premises, including former care homes, large detached houses, healthcare properties, purpose-built facilities and other buildings that can accommodate a particular care model.

For landlords, however, leasing to a care operator involves more than finding a tenant and agreeing a rent.

The property's planning position, physical condition, accessibility, fire safety, proposed use, lease structure and the operator's ability to run the service all need to be considered.

Fraser Bond can help property owners assess their buildings, prepare them for potential occupation and connect the wider property requirements with acquisition, leasing, refurbishment, maintenance and development support.

What Does Leasing a Property to a Care Operator Involve?

A care operator may lease a property from a landlord and use it to provide regulated care or another form of supported service, depending on the operator's business model.

The exact arrangement can vary considerably.

A landlord might lease:

• A former residential care home

• A large detached house

• A former nursing home

• A healthcare facility

• A converted residential property

• A purpose-built care facility

• A property suitable for supported living

• Offices for a domiciliary care business

• Specialist accommodation

• A development that can be adapted for care use

The proposed service matters because different care models can have different planning, regulatory and property requirements.

Is the Property Suitable for a Care Operator?

Before marketing a property to care companies, owners should establish what the building can realistically accommodate.

Important considerations include:

• Number of bedrooms

• Number and position of bathrooms

• Communal areas

• Kitchen facilities

• Staff areas

• Storage

• Garden or outdoor space

• Parking

• Accessibility

• Fire escape arrangements

• Building condition

• Heating and hot-water systems

• Electrical installation

• Plumbing

• Ventilation

• Security

• Location and local amenities

The size and layout of premises are also relevant to CQC registration assessments. CQC says it considers factors including the size, layout and design of places where care is intended to be provided.

A property that appears suitable for ordinary residential occupation may therefore require substantial adaptation before it is suitable for a particular care model.

Planning Permission and Care Use

Planning should be investigated before agreeing a lease based on an assumed use.

In England, residential care homes can fall within Use Class C2, but the correct planning position depends on the proposed operation and the property's existing lawful use.

A landlord should establish:

• Existing lawful use

• Proposed care use

• Previous planning history

• Any planning conditions

• Whether a change of use is required

• Whether physical alterations require planning permission

• Whether building regulations approval is needed

• Whether the local authority has additional requirements

Planning permission and CQC registration are separate matters.

A property owner should not assume that because a care operator can obtain CQC registration, the proposed use automatically has planning approval.

Equally, planning permission does not replace any registration required for the care service.

CQC Registration Is the Operator's Responsibility

For regulated adult health and social care activities in England, the care provider may need to register with the Care Quality Commission.

CQC states that carrying on a regulated activity without registration is an offence. It also requires providers to have their locations and staff ready before submitting an application.

This is important for landlords.

A property owner should not market a building as automatically "CQC registered" simply because a previous care business operated from it.

The incoming operator needs to establish its own regulatory requirements and registration position.

CQC's location guidance also distinguishes between different service models. A care home where people live and receive care can be a CQC location, while a supported living service may generally have its regulated activity organised or managed from another premises.

Former Care Homes Can Attract Operator Interest

Former care homes can be particularly relevant to landlords seeking specialist tenants because the buildings may already contain features associated with care use.

These can include:

• Multiple bedrooms

• Accessible bathrooms

• Communal lounges

• Dining areas

• Commercial-style kitchens

• Staff rooms

• Laundry facilities

• Fire safety infrastructure

• Lifts

• Accessible entrances

• Gardens

• Parking

However, the previous use does not guarantee that the building remains suitable for a new operator.

The landlord should provide accurate information about the property's current planning status, condition and previous use rather than assuming that historical care use will automatically continue.

Large Houses Can Also Be Considered

Property owners do not necessarily need to own an existing care home to attract a care operator.

Large houses may be considered for certain care or supported accommodation models where the property, planning position and proposed service are appropriate.

A large property may offer:

• Several bedrooms

• Multiple bathrooms

• Ground-floor accommodation

• Communal living space

• Private outdoor space

• Off-street parking

• Flexible internal layouts

However, the suitability of a large house depends on the proposed service.

The owner should establish the intended use before investing heavily in conversion works.

Accessibility Should Be Considered Early

Care accommodation may need to accommodate residents with different mobility and support requirements.

Property owners should therefore consider:

• Step-free access

• Door widths

• Corridors

• Staircases

• Accessible bathrooms

• Ground-floor bedrooms

• Handrails

• Ramps

• Lifts where appropriate

• Accessible parking

• External paths

• Emergency evacuation arrangements

The required specification depends on the residents and service being provided.

An operator working with people who have significant mobility needs may have very different requirements from a provider operating a smaller supported accommodation service.

Fire Safety Is a Major Landlord Consideration

Fire safety should be addressed before a property is offered to a care operator.

Government guidance for residential care premises covers buildings where the primary use is residential care and where residents may require assistance to evacuate. It specifically covers residential and nursing homes.

Depending on the property, landlords and operators may need to consider:

• Fire alarms

• Emergency lighting

• Fire doors

• Escape routes

• Fire compartmentation

• Signage

• Emergency access

• Fire extinguishers

• Evacuation procedures

• Electrical safety

• Heating systems

• Kitchen safety

Responsibility for different areas should be clearly established between landlord and tenant.

The lease should also make clear who is responsible for maintaining relevant systems, arranging inspections and completing remedial works.

Who Pays for Care Property Refurbishment?

This is one of the most important questions to settle before signing a lease.

A property may need work before the operator can use it.

Potential works could include:

• Bathroom adaptations

• New kitchens

• Fire safety upgrades

• Electrical works

• Plumbing

• Heating upgrades

• Accessibility improvements

• Flooring

• Decoration

• Door alterations

• External repairs

• Roof repairs

• Security upgrades

• Energy-efficiency improvements

There are several possible approaches.

The landlord could complete the works before letting.

The operator could undertake the works under an agreed lease arrangement.

Alternatively, the parties could negotiate a contribution, rent-free period or other commercial arrangement.

The correct structure depends on the property, operator, lease term and investment required.

Agree the Lease Structure Carefully

Care operators may require longer-term occupation because establishing and operating a care service involves significant investment.

A landlord should consider:

• Lease length

• Rent

• Rent review mechanism

• Deposit

• Rent-free period

• Repair obligations

• Insurance

• Service charges

• Assignment rights

• Subletting

• Alterations

• Planning responsibilities

• Compliance responsibilities

• Maintenance

• Dilapidations

• Break clauses

• Renewal arrangements

Specialist legal advice should be obtained before committing to the final lease.

The landlord should also make sure the lease reflects the actual operational use rather than relying on a generic commercial lease.

Landlords Should Investigate the Care Operator

A suitable building is only one side of the transaction.

The prospective tenant should also be assessed.

Property owners can ask for information such as:

• Company details

• Trading history

• Existing care operations

• CQC registration where applicable

• Registered manager information where relevant

• Financial accounts

• References

• Business plan

• Proposed service

• Funding arrangements

• Intended property works

• Planning requirements

• Expected opening date

• Experience operating similar premises

CQC assesses prospective providers against regulatory requirements, including suitability, staffing, policies and systems, as well as the size, layout and design of proposed care premises.

A landlord should still conduct independent commercial and legal due diligence.

Understand the Operator's Business Model

"Care operator" is a broad description.

The prospective tenant could operate:

• Residential care

• Nursing care

• Specialist care

• Supported living

• Learning disability services

• Domiciliary care

• Mental health-related services

• Rehabilitation

• Other specialist accommodation or support services

These models can have different property requirements.

For example, a domiciliary care provider may primarily require an office or management base rather than residential accommodation for service users.

CQC's current guidance confirms that locations can include premises from which providers organise or manage care delivered elsewhere, such as domiciliary care and some supported living services.

Landlords should therefore understand precisely how the tenant intends to use the building.

Prepare a Property Information Pack

Property owners looking to lease to care operators can make their buildings easier to assess by preparing a detailed property pack.

This could include:

• Full property address

• Floor plans

• Site plan

• Photographs

• Property dimensions

• Number of bedrooms

• Number of bathrooms

• Parking information

• Garden or outdoor-space details

• Existing planning use

• Planning history

• EPC

• Building information

• Previous care use

• Fire safety information

• Existing warranties

• Recent refurbishment details

• Maintenance records

• Asking rent

• Lease requirements

Having this information ready can reduce unnecessary enquiries and help operators establish whether the property fits their requirements.

What Should Property Owners Ask Care Operators?

Before agreeing terms, landlords can ask the operator:

• What type of care will be provided?

• How many residents or service users are expected?

• What planning use is required?

• Is CQC registration required?

• Who will fund adaptation works?

• What alterations are proposed?

• How long is the proposed lease?

• Who will maintain the property?

• Who will maintain specialist equipment?

• What fire safety arrangements are required?

• When does the operator expect to open?

• What evidence of funding is available?

• What experience does the operator have?

These questions can expose potential issues before the parties commit to a long-term arrangement.

Property Owners Should Consider the Local Market

Location can have a major effect on the suitability of a care property.

Operators may consider factors such as:

• Local population demographics

• Demand for the proposed service

• Nearby healthcare facilities

• Public transport

• Local amenities

• Staff accessibility

• Parking

• Residential surroundings

• Competition from existing providers

• Local authority commissioning priorities

A property can be physically suitable but commercially unsuitable if there is insufficient demand for the proposed service.

Landlords should therefore avoid assuming that every large house or former care home will attract a suitable operator.

Should the Landlord Refurbish Before Marketing?

Not necessarily.

In some cases, completing improvements before marketing may make the property more attractive.

In others, the operator may have a specific specification and prefer to undertake the works itself.

Before spending heavily, the landlord should understand the target operator market.

For example, replacing bathrooms to a generic specification may be less useful than agreeing an operator-specific refurbishment programme.

Fraser Bond can assist with property refurbishment, building works, repairs, maintenance coordination and wider property preparation where works are required.

A Practical Example for a Landlord

Imagine a property owner has a large detached house in London with eight bedrooms, several bathrooms, parking and a substantial rear garden.

The owner wants to lease the property to a care operator.

Rather than immediately advertising it as a care home, the owner should first establish:

• Existing planning use

• Potential proposed use

• Property condition

• Accessibility

• Fire safety requirements

• Parking arrangements

• Required refurbishment

• Likely operator type

• Lease expectations

• Rental value

• Responsibility for future alterations

Suppose the property requires £80,000 of adaptation works.

The owner could then compare different commercial structures, such as completing the works before letting, negotiating a contribution from the operator or agreeing an appropriate rent-free period.

The figures are illustrative only. The commercially appropriate structure will depend on the actual property, operator and lease terms.

Finding Care Operators for a Property

Property owners can approach the market through:

• Specialist property agents

• Healthcare property advisers

• Commercial property agents

• Direct operator enquiries

• Care-sector networks

• Property marketing campaigns

• Existing professional contacts

A specialist approach can help position the property around the requirements of care providers rather than marketing it simply as a generic residential or commercial building.

Fraser Bond can help property owners assess the property, prepare it for the market and