Ashfords Solicitors - A Caring Business

But, even though everyone gets old and more and more people retire to live in the West Country, thereby giving home owners an almost guaranteed and continuing revenue stream, it's a highly regulated business and needs specialist advice in order to avoid the many pitfalls and meet the strict legal requirements.

The care home sector is also undergoing massive change too as more and more local authorities controversially divest themselves of both the responsibility and high cost of running their own homes and sell them on to the private sector, such as the current proposed transfer of 26 homes by Devon County Council to Shaw Healthcare.

Leading South West law firm Ashfords has handled numerous care home sales and re-financings in the last 18 months worth some £22,428,000 million. This includes Roborough House in Plymouth, The Manor at Exminster and the Three Corners Nursing home in Brixham, and the practice has developed specialist skills to help deal with the complex business of buying and selling care homes.

Ashfords has just prepared an advisory planning list for anyone considering investing in the care home sector, including 12 key questions, which covers all of the major requirements of running a care home, such as compliance with the rules and regulations required by the Commission for Social Care Inspection (CSCI), the regulatory body which overseas the industry.

Failure to comply with these can, of course, cause concern for an investor or a buyer and greatly delay a transaction while action is taken to rectify the issues which can take some considerable time and incur additional costs.

An example of such a situation arose in relation to the recent acquisition by Ashfords' client, Stonehaven (Healthcare) Limited, of The Manor, Exminster Limited.

The registration for the care home with CSCI was actually in the names of the selling shareholders and not the Company itself. Having spotted this at an early stage, Ashfords advised Stonehaven (Healthcare) Limited regarding the rectification of this matter in order to prevent the deal faltering and limit any consequent delays.

Addressing these issues early is essential to ensure that the parties are ready for completion, and Ashfords clients are able to benefit from the established teams' industry knowledge and expertise in addressing just such potential issues proactively and efficiently.

Tim Heal, Commercial Property partner at Ashfords, said: "Ashfords has acted for both vendors and buyers in the last twelve months on a number of care home transactions, including Roborough House, The Manor, and Three Corners Nursing Home, which supports the view that West Country care homes continue to provide attractive investment opportunities.

"It is essential for buyers and sellers alike to be guided through the process in order to ensure the transactions continue to a quick, successful conclusion and as cost effectively as possible."

John Crocker at leading business agents Christie & Co comments:"We have been involved in a number of care home sales and acquisitions in the last year or so. These underpin the strength of the market in the care business, from investors who are looking to invest in sound business opportunities."

The Royal Bank of Scotland ("RBS") through its RBS and NatWest brands has a dedicated team of seven healthcare specialists who work with care businesses in the South West to assist them in achieving their growth aspirations.

Craig Cabot, Head of RBS Healthcare in the South West commented:

"As the demographics of the UK continue to change, the care sector remains a real focus for business people in Devon and Cornwall who see opportunities created by the continuing strong demand for care homes in the region. Opportunities in this area look likely to continue with the proportion of the population in older age groups increasing significantly over the next decade, as the boomer generations grow older.

"We consider ourselves to have a unique understanding of not only conventional care homes and care villages, but also of specialist facilities catering for areas such as learning disabilities, mental health and children with challenging behaviour."

Anyone who is considering investing in the care home sector and wishes to receive a free copy of the 12-point advisory planning list should contact Annelie Joyce or Tim Heal at Ashfords.

Ashfords is ranked as one of the region's premier law firms in the legal profession's 'bibles', the Legal 500 and Chambers directories, employing nearly 500 staff with 270 fee earners, including 57 partners.

The twelve key areas which need careful consideration are:

1. Share sale or Asset sale- The benefit of a share sale is that if the company is a registered service provider, no new registration with the CSCI will be required when the company is sold. Which will the buyer use?

2. Registration- Does the home have a CSCI registration certificate and what are the conditions of registration, e.g. number of service users and any other restrictions relating to age, illness etc.

3. Appointments- Who will be the registered manager with the CSCI and do they need to be registered with the CSCI? Also who will be the "responsible individual" for the home, duties include showing that the buyer will be able to meet the fitness requirements for registration?

4. Compliance- Have CSCI recommendations or required actions have been complied with? Have the results been seen of Local Authority Social Services Department, the Area Health Authority and Food Safety Inspections?

5. Maintenance - Have you seen inspection certificates of the key equipment, such as hoists, lifts etc. These are costly pieces of equipment, so you must ensure they are fit for purpose and properly maintained.

6. Residents - Have you obtained a list of residents, their details and terms and conditions of residency, are they DSS or privately funded? Also, what is the present occupancy of the home, which can be seasonal, so do you want a warranty as to occupancy levels?

7. Internal Accounting - Has the home correctly accounted for petty cash (pocket money) for their residents, and how much is held and how will this be dealt with on the sale of the home?

8. Litigation- Is there any current or potential litigation, insurance claims or complaints to be aware of, including claims by residents? Have any residents been removed at the request of the Local Authority or relatives and, if so, why?

9. Environment- Have there been any environmental problems or disputes or any hazardous substances or waste on the premises?

10. Property- Does the care home have all of the necessary planning consents and comply with building regulations, and are any future plans permitted by CSCI?

11. Assets- Who owns the assets of the home? In our experience, assets of care homes are often owned by someone other than the "Seller".

12. Employees- Have all necessary consents, permits and registrations been granted to staff employed at the home?

Key Contacts

A Caring Business

Introduction