From the Editor: OakNorth publishes new Sector Pulse report
The Care Home Environment Magazine
The Care Home Environment is the leading business information resource focusing on the build and equipping of care homes
OakNorth has published its second Sector Pulse report on the UK’s care sector, providing a snapshot of some of the key trends that the digital bank has seen in the sector over the last six months, as well as its predictions for 2025.
The report outlines a sector continuing to face significant challenges. A reduction in overseas care worker arrivals following the introduction of stricter immigration policies means that the sector continues to grapple with severe workforce shortages. With an ageing population, these challenges are only expected to increase, with Skills for Care estimating that the sector will need 540,000 additional social care workers by 2040 to meet demand.
The Autumn Budget brought further challenges, with the National Living Wage set to increase by 6.7 per cent next year, and employer National Insurance Contributions being raised from 13.8 to 15 per cent, with the earnings threshold at which employers begin paying these contributions lowered from £9,100 to £5,000 (partly compensated by the increase in Employment Allowance from £5,000 to £10,500 and removal of the £100,000 threshold for allowance eligibility). Together, these changes could inflate operating expenses, putting many in the sector under strain.
However, according to the report, fee increases combined with a return of occupancy levels to near pre-pandemic levels have meant that the sector has – so far – managed to weather the storm. Consolidation has also continued to shape the sector in the second half of the year, as larger operators and private equity firms sought to strengthen their market share.
The report also finds a seniors housing market increasingly embracing diverse tenure models. Age-targeted rental products and shared ownership options continued to gain traction over the last six months, according to OakNorth , with the pipeline of private rental units expected to nearly double from 4,100 to 10,000 by 2027. Integrated Retirement Communities are at the forefront of this shift, with operators incorporating rental options alongside sales to enhance accessibility.
Ben Barbanel , head of debt finance at OakNorth , said: “Traditional ownership models have become increasingly inaccessible for many retirees due to high property prices and rising operational costs. New rental products … are gaining traction. These models offer more flexibility and affordability, providing retirees with an alternative to traditional homeownership. These emerging developers cater to a broader range of consumer needs and budgets, helping bridge the affordability gap that has long plagued the sector. This trend reflects a broader move away from the ‘one-size-fits-all’ approach, which previously focused heavily on high-end, amenity-rich developments that excluded large portions of the market.”
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