Care homes are vital in the UK’s healthcare system, providing essential services for an ageing population. Yet for many investors, reputational risk remains a major concern – often driven by media narratives, misconceptions about regulation, and a lack of clarity around how the sector operates.
To explore these challenges and the best ways to mitigate reputational risk, we sat down with Mike Toft, Head of Care Homes; Chris Wishart, Head of Care Home Investment; and Carrie Pilgrim, Quality Assurance Director at Octopus Capital.
A difficult decision – one many face
When Florence’s father had a fall and could no longer live independently, her family faced a difficult decision. They wanted the best for him, but the thought of moving him into a care home made Florence hesitate.
She recalled the headlines: understaffed facilities, failing operators, harrowing stories of neglect. The idea of entrusting her father’s wellbeing to a care home felt like a risk.
Would he receive the care and dignity he deserved? Or would he become another statistic in a news report?
Florence’s fears are not uncommon. Many families share them, influenced by high-profile failures that dominate the media. And this same hesitancy extends to investors.
Just as Florence worried about whether her father would be properly cared for, investors worry about whether they are backing the right operators – those with the expertise, governance, and financial resilience to maintain high standards.
The concern isn’t just about reputational damage but real-world impact. If an operator fails, residents suffer. And if a care provider gains negative press, investors question whether their capital is at risk – or worse, whether they could be inadvertently supporting a failing system.
For both families and investors, reputational risk in the care home sector is an emotional and financial consideration.
But is it based on reality?
Understanding reputational risk in care home investment
Reputational risk in care homes refers to the potential for adverse public perception, which can impact investor confidence, tenant demand, and long-term returns. The sector is highly scrutinised, and a single negative event – such as a care quality failure, financial mismanagement, or regulatory breach – can make headlines.
However, media narratives often shape the perception of risk more than the sector’s underlying fundamentals.
Mike Toft, Head of Care Homes explains: “The reality is that care homes are one of the most essential and tightly regulated sectors in real estate. While there have been past challenges, the market has matured significantly, and a well-managed investment can deliver both strong financial returns and a meaningful social impact.”
Common misconceptions
Despite the growing need for high-quality care, several misconceptions hold investors back.
One of the most persistent is that care homes lack sufficient regulation. In reality, care homes are among the most highly regulated sectors in healthcare. The Care Quality Commission (CQC) enforces strict standards in England, with homes undergoing regular and rigorous inspections.
Another misconception is that private investment in care homes inevitably leads to profiteering at the expense of residents. While concerns about fee structures exist, responsible investment is critical in ensuring that capital is directed towards improving facilities, staff training, and raising standards of care.
The COVID-19 pandemic placed enormous pressure on care homes, but it also accelerated improvements in building design to maximise infection control delivery, staff development, and operational resilience. Today, the sector is better prepared than ever before.
Yet public perception remains skewed by extreme cases in the media, leading many to assume that reputational risk is unavoidable. Most care homes operate successfully, providing high-quality specialist care under strict regulatory oversight.
Carrie Pilgrim, Quality Assurance Director notes: “We often see investors hesitating because of perceived risks associated with the sector. But care homes are more regulated than hospitals, and strong due diligence ensures that we work only with high-quality operators who uphold high standards of care.”
How investors can mitigate reputational risk
Investing in care homes doesn’t mean taking on uncontrolled risk. The key is to back the right operators with robust governance structures and a clear focus on quality assurance.
Investors should conduct thorough due diligence, assess regulatory compliance, and ensure that environmental, social, and governance (ESG) factors are considered.
A track record of strong operational performance is also critical. Partnering with operators with a history of delivering high-quality care and financial stability can help mitigate reputational risk.
Chris Wishart, Head of Care Home Investment, highlights the importance of a structured approach: “Our investment process involves a multi-layered assessment. We look at financial resilience, quality governance, and sustainability – ensuring we partner only with operators who demonstrate best practices and high standards.”
The Octopus Capital approach
At Octopus Capital, the investment approach is highly selective and hands-on. The focus is on partnering with operators committed to high-quality, sustainable, and socially responsible care provision.
A rigorous selection process ensures that each operator is assessed across financial, quality governance, and ESG criteria. Once investments are made, our partnership approach and ongoing monitoring ensure that standards are maintained over time.
Mike Toft emphasises: “We see our role as not just investors, but as stewards of responsible capital. By setting high standards and working closely with our operators, we help ensure care homes continue delivering for residents and investors.”
Shaping the future of care home investment
With an ageing population and increasing demand for high-quality care, the UK care home sector represents a significant investment opportunity. By 2050, over 24% of the UK population is expected to be aged 65 or above.1 Yet many existing care homes are outdated and in urgent need of upgrades and modernisation to meet the changing needs of residents.2
However, the sector must also evolve. Investors will need to navigate changing demographics, regulatory developments, and the increasing complexity of care needs. At the same time, private capital is crucial in bridging funding gaps left by the public sector.
Chris Wishart believes these factors will define the sector’s future: “We believe investors who understand these trends and take a proactive approach to managing reputational risk will be well-positioned to capitalise on the sector’s long-term growth.”
Seeing past the headlines – a sector worth understanding
Reputational risk in care home investment is real but can be manageable once mitigations are put in place.
The key is understanding the risks, separating perception from reality, and backing high-quality operators with a track record of excellence.
For investors willing to look beyond the headlines, the care home sector potentially offers both strong financial returns and the opportunity to make a meaningful difference in people’s lives.
The value of an investment can fall as well as rise. Investors may not get back the full amount they invest.
Find out more
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1 Office for National Statistics – Living longer and old-age dependency
2 Caring Times – Government urged to refurbish ‘outdated’ sheltered housing for older Brits
