Why are care homes so expensive? Where the money goes

Care homes are expensive mainly because they must staff every hour of every day. Wages are the largest pressure, and nursing, regulation, building and running costs add to it. Homes that depend on council fees also charge self-funders more to cover the gap. A typical self-funded place in England costs around £1,520 a week.

At a glance

• A care home must have staff on duty 24 hours a day, 7 days a week, so staffing is the biggest cost.
• The National Living Wage for workers aged 21 and over rose to £12.71 an hour in April 2026, and almost half (49 percent) of independent-sector adult social care workers were paid below that rate beforehand.
• The Competition and Markets Authority found in 2017 that self-funders paid on average 41 percent more than councils for the same service in mixed homes.
• Typical England fees are about £1,450 a week for residential care and £1,690 for nursing care (The Care Panel Q4 2026 Index).
• Savings under £23,250 may qualify for council help; the NHS pays £267.68 a week towards nursing care.

Why do care homes cost so much?

A care home sells a room, meals and utilities, but mostly it sells people’s time, around the clock. Residents need help at night, at weekends and on bank holidays, and they cannot be left without cover. Unlike a business that can close at 5pm, a home must keep a safe number of trained staff awake and present all the time.

Fees also pay for the building, upkeep, food, laundry, activities, insurance, management and the cost of being regulated. The big, hard-to-reduce items are people and premises. Costs therefore move with wages.

How much of the cost is staffing?

Skills for Care, the sector’s workforce body, reports that care workers and support workers made up 58 percent of the adult social care workforce in 2025/26, and that the sector’s total wage bill was £33.6 billion. The CMA also noted that the sector reported cost pressures due largely to wage costs.

A simple calculation shows the scale. Keeping just one care worker on duty at all times needs 168 paid hours a week. At the National Living Wage of £12.71 an hour, that is about £2,135 a week in basic pay before employer National Insurance, pension contributions, holiday and sickness cover, training and supervision. A home needs several staff on duty, plus cooks, cleaners, maintenance and managers.

Every pay rise or minimum wage increase therefore feeds into fees, and most homes revise fees once a year, usually in April. High turnover adds recruitment, induction and agency costs. Our guide to care home staffing levels explains what to look for when you visit.

Why do nursing homes and regulation add cost?

Care homes, with and without nursing, and the premises they use are regulated by the Care Quality Commission. Staying compliant takes management time, training and record-keeping on top of direct care. See what the CQC does.

Nursing homes also employ registered nurses, who are paid more and are harder to recruit. Skills for Care estimates that care homes with nursing in England had about 295,000 filled posts across 4,223 locations in 2025/26, around 70 posts on average per home, including 35,000 regulated professionals. Typical fees show the difference: nursing care is about £240 a week higher than residential care in The Care Panel’s Index. The NHS pays NHS-funded nursing care of £267.68 a week directly to the home for eligible residents. Our FNC rates page lists earlier years.

What do buildings and running costs add?

Homes must be heated, lit, cleaned and maintained, and buildings need investment over time. The CMA found in 2017 that many homes serving mainly council-funded residents could cover day-to-day running costs but not the additional investment needed to maintain and modernise their facilities. It also observed that nearly all new care homes being built were in areas where they could focus on self-funders.

That matters for families, because the places that can afford to build and refurbish are not always the places that serve people on council funding.

Why do self-funders pay more than the council?

Most care homes take both self-funders and council-funded residents. The CMA’s 2017 market study estimated that average fees paid by councils were below the full cost of serving those residents. It found self-pay fees were on average 41 percent higher than council fees in the same homes, a difference of £236 a week at the time, and that about a quarter of homes had more than 75 percent council-funded residents and were most at risk because council fees were on average as much as 10 percent below total cost for them.

In practice, self-funders in mixed homes meet a greater share of the home’s fixed costs. This is sometimes called cross-subsidy. The CMA also noted that the large majority of self-funders are not wealthy, and that the difference is poorly visible to the public. These figures are from 2016 evidence, so today’s gap may differ, but the principle is well established. Ask a home whether its fee for a council-funded resident differs from its private fee, and see council care rates and care home top-up fees.

What can you do about the cost?

• Check whether the council could help. With savings under £23,250 you may qualify; between £14,250 and £23,250 you pay tariff income of £1 a week for every £250. Use the what will I pay tool.
• Ask about NHS continuing healthcare if the main need is a health need.
• Claim Attendance Allowance of £76.70 or £114.60 a week, which continues for self-funders in a care home.
• Get a written price list, ask what is included and what costs extra, and ask how fee rises are decided. See care home fees explained and whether fees are all-inclusive.
• Compare costs in your area using care home fees by region.

Frequently asked questions

Why are care homes so expensive in the UK?

Because they must provide trained staff around the clock, and wages are the largest cost. Nursing, regulation, building upkeep and food add to it, while councils often pay less than the full cost, which pushes private fees higher.

Do care homes make large profits?

It varies by provider. The CMA’s 2017 analysis found the sector as a whole was only just able to cover its operating costs and cost of capital, while homes mainly serving council-funded residents were less sustainable. Current figures differ by operator.

Why do self-funders pay more than council-funded residents?

Because council fee rates have often been below the cost of care, so many homes charge private residents more to remain viable. The CMA found self-pay fees averaged 41 percent higher in the same homes in 2017.

Why does nursing care cost more than residential care?

Nursing homes employ registered nurses, who are paid more and are in shorter supply. Typical fees are about £1,690 a week for nursing care against £1,450 for residential care in England, and the NHS contributes £267.68 a week.

Will care home fees go down?

Nobody can promise that. Fees usually rise each year, often in April, and the National Living Wage rose from £12.21 to £12.71 in April 2026. Comparing several homes and checking funding routes is the most reliable way to control costs.

Where to get help next

Use the care cost calculator to estimate fees, read how much a care home costs, and compare homes through find care.

Sources

• Skills for Care: The state of the adult social care sector and workforce in England 2026, executive summary
• Skills for Care: Care homes with nursing in the adult social care sector 2025/26
• GOV.UK: National Minimum Wage and National Living Wage rates
• Competition and Markets Authority: Care homes market study, summary of final report

Reviewed by The Care Panel team on 9 November 2026. This guide is general information about care in England, not legal, medical or financial advice. Rules and rates change; check with your council or an adviser before making decisions.