The introduction of the National Living Wage will have a detrimental effect on the Welsh care sector particularly in areas outside of Cardiff warns property consultants Bruton Knowles.
The result will be a rationalisation of the sector with those centres struggling to break even having to close and an influx of property stock coming onto the market.
Bruton Knowles argues that the impact of the NLW will be more keenly felt in the South Wales valleys where care homes and nursing centres look after a higher proportion of publicly funded clients and fee levels are much lower.
Nick Worman from Bruton Knowles is advising all care and nursing home managers to review their current operation structure to see if there is any room for manoeuvre before it is too late.
“Because many rely on public funded clients they will not be able to pass on this new expense. In order to cope with the rise in wage levels there will most likely be a restructuring of the sector with those properties that do not receive the required investment having to reduce their level of service or worse having to shut down.
“The potential reduction in the number of care and nursing homes could have serious implications for those who rely on this vital service, with those in the valleys being hit hardest.”
In Cardiff, with a higher proportion of private paying clients, investment is better with banks happy to lend and more property stock being taken up by the sector.