The Care Home Postcode Lottery: Why Costs Vary by 100% Across England

TreatCompare analysis of NHS England Adult Social Care Finance Return (ASC-FR) data reveals that residential care home costs vary by more than 100% between the lower-cost and most expensive council areas in England. A self-funding resident in parts of the South East can expect to pay upwards of £1,400 per week, while the same category of care in parts of the North East costs under £700 per week. The gap is not explained by care quality alone — it is driven by a combination of labour markets, property costs, procurement power, and local supply constraints.

The scale of the gap

Across 93 local authorities with comparable data, the variation in average weekly residential care costs is striking.

These figures represent self-funder rates. Council-funded rates are typically 20-40% lower for the same placement.

What drives the variation

Labour costs

Staff wages account for 60-80% of a care home's operating costs. While the National Living Wage sets a floor, providers in London and the South East routinely pay above this to attract and retain staff in competitive local labour markets. A care assistant in central London may earn £12.50-£14.00 per hour, compared to £11.44-£12.00 in the North East. Across a workforce of 50-100 staff operating 24/7, these differences compound into hundreds of thousands of pounds per year.

Property costs

Care homes need large buildings, often purpose-built or substantially converted. In areas where land and construction costs are high, this is reflected in fees. A new-build 60-bed care home in the Home Counties might cost £8-12 million to develop, compared to £4-6 million in the North. Providers pass these capital costs through to residents over the life of the building.

Local authority procurement rates

Councils negotiate rates with care providers for council-funded residents. These negotiated rates vary significantly between authorities, reflecting local budgets, political priorities, and the strength of the provider market. Where council rates are low, providers compensate by charging self-funders more — widening the gap.

Care quality and staffing ratios

Homes rated Outstanding or Good by the Care Quality Commission (CQC) tend to charge more, partly because higher ratings correlate with better staffing ratios, more training, and better facilities. However, CQC ratings explain only a fraction of the price variation — many of the most expensive homes are rated Good rather than Outstanding, and some competitively priced homes achieve Outstanding ratings.

Supply and demand

In areas where there are fewer care home beds per head of the elderly population — known as care deserts — providers face less competition and can charge higher fees. This is particularly acute in rural areas and in parts of southern England where planning restrictions and high land costs discourage new care home development.

The self-funder penalty

One of the most significant and least understood aspects of care home pricing is the cross-subsidy between council-funded and self-funded residents.

Self-funders pay more for the same bed, in the same home, with the same care. Providers acknowledge this openly: council rates do not cover the full cost of care, so the shortfall is recovered from private-paying residents. The Competition and Markets Authority (CMA) confirmed this cross-subsidy in its 2017 care homes market study, and the situation has not materially changed.

The care desert connection

Areas with fewer care home beds per capita tend to have higher costs. This relationship is not perfectly linear — London is both expensive and relatively well-supplied — but across much of rural England, limited supply and high demand create upward pressure on fees.

The closure of smaller, older care homes that cannot meet modern regulatory standards has reduced supply in many areas, concentrating the market among larger operators with newer buildings and higher cost bases. Between 2015 and 2025, England saw a net reduction in care home beds despite growing demand from an ageing population.

For a detailed analysis of which areas are most affected, see the care deserts analysis and the cost vs supply comparison.

Regional breakdown: where costs fall

England average: approximately £930 per week for self-funded residential care (2025/26 data).

Navigating the variation

The postcode lottery is a structural feature of the English care system, not something that can be resolved by individual action. However, understanding the variation can inform decisions.

Council areas that border each other can have meaningfully different fee levels. A home five miles away in a different local authority area may charge £100-200 per week less for comparable care. Checking costs in neighbouring areas is a practical step.

To explore costs in your area, visit the care costs hub. For a breakdown of how costs compare across council boundaries, see the regional inequality analysis. To compare specific council areas, use the costs by region tool.