OakNorth’s sector pulse report has shone light on the difficult situation faced by the care sector – although it also highlights how attractive the sector is for investors.

The report includes an estimate from Care England that residential care will face a £2.2bn budget shortfall. The long-standing issue of workforce is also looming large.

There are currently approximately 131,000 vacancies, and the report predicts this will worsen with care workers no longer being recruited from overseas. There has been an 81% decrease in overseas care worker visas issued.

Staffing costs have also increased by 6.7% due to the national living wage and national insurance increases. Utility bills and commercial water rates have also increased by 50%.

Despite these headwinds, the sector has strong investor interest with platform-based acquisitions, REITs and PE firms all making purchases. US investors are also increasingly involved. The report states that Cushman & Wakefield’s Q1 2025 MarketBeat report claims 68% of the £531m invested in the UK elderly care market comes from US investors.

The report is also hopeful about the UK Government’s pension “megafunds” which will manage at least £25bn by 2030. This could add up to £6,000 to the average pension pot, enabling people to afford higher-quality retirement living options.