Private and local-authority care home fees, and why they matter to lenders
A care home earns from two broad sources: private self-funders and local-authority placements. The balance between them shapes the strength of the home's income, which is exactly what lenders and valuers price.
Care homes earn from private self-funders, who pay higher fees, and from local-authority funded residents, who pay lower, set fees. A higher share of private-pay income usually means stronger, more resilient fees and a better trading margin, which lenders and valuers reward with higher leverage and a higher multiple. This guide explains the home's income mix for lending purposes. It is not advice for families on how to pay for care.
At a glance
- Private (self-funder) nursingAround £1,696/wk (Carterwood, Sep 2025)
- Self-funder residentialAround £1,302/wk (Carterwood, Sep 2025)
- Nursing fee, all sources£1,420/wk (Knight Frank, FY2024/25)
- Residential fee, all sources£1,153/wk (Knight Frank, FY2024/25)
- Why it mattersHigher private-pay share supports keener lending
The two sources of fee income
This explains a care home's income mix from a business-funding and lending angle. It is not guidance for families on paying for care, council funding thresholds or the care cost cap.
Care home residents are funded in two broad ways. Private or self-funding residents pay their own fees, which are higher and negotiated by the home. Local-authority funded residents are placed and paid for by the council at rates the council sets, which are lower. Most homes have a mix of both, and that mix is central to how the home trades.
How the fees compare
Private fees sit clearly above local-authority rates. Knight Frank reported an average nursing fee of 1,420 pounds a week for FY2024/25, splitting into 1,638 pounds private and 1,365 pounds local-authority, and an average residential fee of 1,153 pounds, splitting into 1,346 pounds private and 1,018 pounds local-authority. Carterwood reported self-funder fees higher still, at 1,696 pounds a week for nursing and 1,302 pounds for residential as at September 2025, up 8.3 and 8.5 percent year on year.
| Care type | Private | Local authority | Source |
|---|---|---|---|
| Nursing (all sources £1,420) | £1,638 | £1,365 | Knight Frank, FY2024/25 |
| Residential (all sources £1,153) | £1,346 | £1,018 | Knight Frank, FY2024/25 |
| Self-funder nursing | £1,696 | n/a | Carterwood, Sep 2025 |
| Self-funder residential | £1,302 | n/a | Carterwood, Sep 2025 |
Why a higher private-pay share helps lending
A home with a higher private-pay share earns more per bed and is less exposed to local-authority budget decisions, so its income is both stronger and more resilient. That feeds straight into the EBITDARM margin lenders and valuers focus on, and it makes the home easier to fund. Knight Frank reported an average EBITDARM margin of 30.1% of income for FY2024/25, and the regions with the deepest self-funder catchments tend to show the strongest margins.
- Higher fees per bed lift maintainable earnings and EBITDARM
- Less reliance on council fee settlements reduces income risk
- A diverse private base avoids concentration in one local authority
- Stronger, more durable income supports higher leverage and a higher valuation multiple
Regional differences in the funding mix
The funding mix varies sharply by region. Knight Frank noted the North East has the highest self-funder share of any UK region, at around 60 percent, even though its fee base is the lowest, which helps keep margins sound. The South East has the deepest self-funder catchment and the highest fees, while the East of England shows nursing EBITDARM margins around 40 percent or above, among the strongest in the country. We factor this regional picture into how we present a home to lenders.
Private and local-authority care home fees, and why they matter to lenders: common questions
What is the difference between private and local-authority care home fees?
Private or self-funding residents pay their own, higher fees negotiated with the home. Local-authority funded residents are placed and paid for by the council at lower, set rates. Knight Frank put average nursing fees at 1,638 pounds private versus 1,365 pounds local-authority for FY2024/25.
Why does the fee mix matter to a lender?
Because a higher private-pay share means higher fees per bed and less exposure to council budgets, so the income is stronger and more resilient. That improves the EBITDARM margin and supports higher leverage and a higher valuation multiple.
Is this guide about how families pay for care?
No. It explains a care home's income mix for business-funding and lending purposes. It is not advice for families on council funding, means tests or the cost of care cap.
Which regions have the strongest self-funder base?
Knight Frank reported the North East has the highest self-funder share at around 60 percent, while the South East has the deepest self-funder catchment and the highest fees. The East of England shows particularly strong nursing trading margins.
Funding a care home?
Send us the home and the operator and we will come back with a view on fundability and likely terms within one working day.