TAKE CARE – BUYING AND SELLING ACTIVITY FLURRY PREDICTED

The Welsh economy is set to experience a flurry of buying and selling activity in the care homes sector as an upward trend in demand coincides with fundamental tax changes coming into play next April, according to business specialists.

Experts in Wales are predicting that the country’s 1,200 registered care homes will be changing hands with dizzying speed as the desire by larger care home companies to build their portfolios to meet demand converges with a new tax regime.

Specialist advisors Broomfield & Alexander – who are holding a seminar on the issue next week with Cardiff-based commercial solicitors New Law – say the situation is being made more volatile as smaller care home operators look to exit their businesses before they have to pay a more punitive capital gains tax bill post April 2008.

Broomfield & Alexander director Leighton Reed pointed to recent surveys which confirm rising levels of demand, including figures from the Welsh Assembly Government which projected that 21% of the Welsh population will be aged 65 and over in 2021 - up from 17% in 2003 - many of whom would require long-term care in residential homes.

He said that trend combined with increasing public expectations of health services, increasing affluence, and increasing access to health information leading to a better informed public.

“We expect this combination of trends, aspirations and affluence to further fuel demand and encourage larger corporations to buy up still more smaller, individual care homes in the next few years,” he said.

“At the same time, increasing statutory regulations and the creation of the Care and Social Services Inspectorate Wales to regulate all care homes has had a dramatic impact. Independent operators are becoming more concerned about their ability to meet the now numerous standards such as ratio of carers to clients, minimum number of beds/space, care times and so on.

“This is leading to a consolidation within the market place – many smaller, privately-run care homes are being bought up by larger care groups who are looking for geographical reach in their care portfolio and who have the man power to deal with the compliance,” added Mr Reed.

“We can also add to this the growth area of the past five years, which is in specialist care homes catering for people with special needs, especially amongst the young adult populations. Again, it is only the larger care home groups which will be able to service this level of care efficiently.

“It all adds up to smaller operators looking to sell their homes to the bigger groups to take advantage of the interest, and before they become unable to meet the regulatory demands of the sector.

“You also have the added focus that from April next year, any capital gain made on the sale of a business such as theirs will attract a tax rate of 18% compared with the 10% that it is currently - clearly a situation which we believe will generate a significant flurry of selling activity in the next couple of months.”

“Buying or selling a care home – it’s all about timing?” is a free seminar on 28 November 2007 at the Vale Hotel & Spa, Hensol, Vale of Glamorgan from 8.30am until 10.30am. Contact Claire Griffiths on 029 2054 9939 or email marketing@broomfield.co.uk for more details.