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Why are care home costs rising?

Author: Tim Davies LLB

Author: Tim Davies LLB

Why are care home costs rising?

Why are care home costs in England and Wales rising? The Compass CHC team explores this issue and highlights what options are available to combat care home costs

What is the average cost of care home fees?

Last year (2014-2015), the average care home costs rose by 2.5%, while the previous year (2013-2014) showed a rise of 1.1%.  The rise of 2.2% in pension incomes was outstripped by rising care home fees for the first time in three years.

The average annual cost for a room in a care home can now easily exceed £29,000, a figure which is already double the average pensioner’s income of £14,300. This figure can then easily rise to an average of £37,500 a year if nursing care is also needed.  The average weekly cost can vary hugely depending on where you are based in the country, but also on what type of care your relative needs.  We regularly encounter instances of clients paying costs in excess of £1,000 a week for a nursing home with dementia care.

Why are care home costs rising?

Due to the necessity of minimum wage being raised for nurses and care workers, this undoubtedly has a ripple effect on the costs of care. The most rapid rise in fees has occurred in the East and South East of England, where the average costs have reached £33,800. The lowest average costs remain in the North East, at £24,232.  Unfortunately the costs are only likely to rise further with the increase to the national minimum wage to a living wage as has been proposed.  Whilst it is of course positive that carers will be receiving a fair wage to reflect the challenging and invaluable service that they provide, it is unlikely that care home owners will wish the wages increases to impact on their profit margins and so care home costs to residents are likely to increase proportionately to match the staff wage increase.  A large number of care homes are not running at a profit and will need to increase care home costs to the patient simply to continue to operate.

It has been widely reported that there are plans for a large number of homes to increase.  By decreasing the availability of places for patients needing nursing home care this is also likely to result in care home costs increases further still on the basis of supply and demand.  If demand outstrips supply, or the availability of nursing home places, then home owners are able to increase costs to match the market demand.

Along with an ageing population and cuts to funding, the discrepancy between care home costs and income will have to be addressed.

What should self-funders be aware of when it comes to care home costs?

If you are funding your own care or your relative’s care, you are known as a self-funder. It is self-funders who are hit hardest by the rising costs of care home fees, and very often they don’t actually know why or what exactly their fees are going towards. Reportedly, self-funders can pay 10pc to 20pc more than funded residents, sometimes for the same level of accommodation and care.

It therefore may be worth following up with the care home to establish what exactly your relative’s care home costs are covering. If the cost of their nursing care is rising, it may be an indication that their care needs are also increasing. Subsequently, if it can be established that the need for care is primarily a health need they may be eligible for Continuing Healthcare Funding.

If you believe your relative may be eligible for NHS Continuing Healthcare funding, this would entitle them to the full care home costs being met by the NHS, regardless of what savings or assets they own. 

If your relative is paying for care and they have complex health issues, for example issues associated with dementia, Alzheimer's or Parkinson's disease, you should not hesitate to contact an expert member of our team today.  We will provide a free, independent confidential and no obligation assessment of your relatives entitlement to NHS continuing healthcare and will explain the process and the options open to you.  We can be contacted directly on 0121 227 8940, or you may wish to complete our free assessment and a member of our team will contact you.

Author: Tim Davies LLB


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Do not delay, contact us today. We specialise in securing funding from day 1 and assisting families with the process from the outset. Don’t wait until a negative decision has been made and it is then necessary to have to appeal the outcome. This can take many months and all the while the patient will be having to pay the cost of their care.

Did you know?

If an individual is approaching the end of their life then a “fast track” Continuing healthcare funding assessment may be appropriate. This enables the individual to receive prompt NHS funding to meet the cost of care at the end of life stage.

What is Continuing Healthcare?

Click the video to see a detailed explanation.

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