Vulnerable children become income streams in gold rush to invest in care homes

What do the directors of freight businesses, guest houses, insurance brokers and property developers have in common?

- James Tapper & Charlotte Reck

They have all opened children’s homes in the last year.Investors are flocking to a new opportunity. England now has 4,010 children’s homes, a record number, and almost 15% of these - 520 homes were registered with Ofsted in the 12 months up to March this year.

An Observer analysis shows that 41% of these new children’s homes are run by companies founded after 2022. While some were set up by people with a long history of working with children, others have a new enthusiasm for the care sector.

A home in Bury, registered in May 2024 and rated as “requiring improvement” by Ofsted, is run by a company whose director has also been in charge of a tax consultancy, an IT firm, a call centre and a bookkeeping firm. Another, in Southend, is run by the owner of a guest house.

Property advisers have started to push children’s homes as an investment vehicle. Foot Forward Property Investments says it “ensures a net income of £81,000 per year for a minimum of 20 years” for what it calls a “hands-off” investment. Supported Living Gateway has urged property investors to “pay attention to the children’s homes sector”, but warns it is “different from standard buy-to-let”.

It feels like a gold rush. How did it happen? And what does it mean for the children being looked after?

The boy - let’s call him David - loves sign language. He scratches his armpits and waggles his finger, making the sign for “cheeky monkey”. When his carers sign it back at him, he feigns disbelief. It’s a game he can play all day. The 11-year-old is deaf and has been in care since the age of two. He started learning to sign after arriving at this children’s home, in northern England, about a year ago.