The pressure is mounting with respect to local authority and NHS fee rates. From around the country, we’re receiving intel indicating that commissioners are trying to find new ways to tighten up on budgets. For example, the application of fee bands is not always transparent, and we are told that people are being allocated to inappropriate bands. In other places, assessments are being delayed and the outcomes are not always in line with the subsequent refusals of uplifts or proposed reductions in support hours. Some councils are requesting permission to increase council tax above 5%. Others are employing consultants to reduce their costs. None of this is positive news and we’re supporting providers to push back, using local authorities’ obligations under the Care Act and the obligations of ICBs and other public bodies, to try to maintain rates at appropriate levels and prevent providers from having to terminate placements and hand back contracts to remain sustainable. We expect this to be a huge issue in 2026.

In late 2025, CQC held a consultation about the way it assesses and rates providers. They are proposing changes to the CQC assessment framework and guidance and to their methods for inspecting, assessing and awarding ratings. They propose to correct some of the issues created during the shambolic roll-out of the Single Assessment Framework (SAF), for example, they intend to develop sector-specific frameworks, do away with numerical scoring, reintroduce written ratings characteristics, replace the current quality statements with supporting questions, and simplify and reduce duplication within their new framework.

Overall, we view this as good news for providers. After two years of chaos, CQC are proposing to return to something closer to what we had prior to the SAF. We would, however, note that there will be no further consultation on the rating characteristics or supporting questions. It is also unclear whether there will be a further public consultation on the new assessment frameworks, once developed by CQC. CQC are also proposing to assess providers every three to five years, which in our view, is not enough to ensure that ratings are up to date and accurate.

The Employment Rights Bill (ERB), the most fundamental reform to employment law in over 50 years, is due to be implemented on a staggered basis starting in April 2026. The first key reform will be to increase eligibility and entitlement to Statutory Sick Pay, which will further increase employment costs, at a time when the NMW is due to increase again.

Employment costs are under the spotlight again with the consultation on the new Fair Pay Agreement for Adult Social Care ending in January and the ERB providing for the establishment of an Adult Social Care Negotiating Body to facilitate the process and negotiate the Fair Pay Agreement.

In addition to their role on the Adult Social Care Negotiating Body, trade unions will have increased prominence in the sector due to ERB measures increasing their rights to gain access to workplaces for the purposes of acquiring members and seeking voluntary recognition from providers. The thresholds for trade unions to acquire statutory recognition are also due to reduced, making it easier to force recognition on providers. Providers, particularly those with the largest workforces, need to start preparing their strategy for managing this now.

The ERB provides for the introduction of a new Fair Work Agency to enforce non-compliance with NMW, holiday pay and sick pay rights, and with greater enforcement powers and penalties for non-compliance. It also includes significant restrictions on fire and re-hire as a means of implementing changes to terms and conditions of employment, a new liability for harassment of workers by third parties and an extension to the time limits for pursing unfair dismissal claims from three to six months.

During 2026, the Government will be consulting on ERB measures due to come into force in 2027, including tighter regulation on the use of zero hours contracts, unfair dismissal rights from 6 months’ employment and possibly the removal of the financial cap on compensation for unfair dismissal.

The Government has announced significant changes to settlement rules with a proposal to change the current 5 year qualifying period to 15 years for care workers. If implemented, this would mean providers needing to offer sponsorship for substantially longer periods of time and having to incur the associated costs such as the immigration skills charge. The changes are currently subject to a consultation process which ends in February 2026. They are then due to come into effect from April 2026. Providers should consider inputting into the consultation.

There has been a significant increase in compliance visits, suspensions and revocations this year with the number of revocations doubling from the previous 12 months. The care sector has particularly been impacted and this is expected to continue into 2026. It is essential providers are aware of their sponsor duties and have systems and processes in place to ensure compliance. Providers may want to consider a mock audit to review everything and identify any gaps or risk areas.

With such significant reform on the horizon, the Social Care HR Leaders Network will continue to provide an essential peer network for HR leaders wanting to stay ahead of the changes and have the opportunity to share ideas and collaborate with their peers on how to implement them.

Welltower stole the headlines in late 2025 with its £5.2bn acquisition of Barchester via a RIDEA model, underlining the dominance of overseas investment in the UK care market which is expected to continue into 2026. Underneath this, activity in the mid-market has remained solid with plenty of groups looking to acquire and expand and, in many cases diversify. Competition remains high with operators needing to be flexible in their approach to funding and investment partnerships in order to secure opportunities. There is certainly frustration at the level of opportunities available but with the budget safely behind us and operational challenges remaining high, we expect this to change.

Deal times remain protracted, often exceeding 6 months. There is no one clear reason for this. In our experience delays have been caused by a combination of funding conditions, sellers coming to market unprepared for the onslaught of due diligence and buyers unwilling to take a view on additional capital expenditure, particularly where non-compliance with fire regulations is the cause. As ever, we encourage those coming to the market to work with their professional advisers at an early stage to ensure they have a full and compliant data room before they start the process.

The adult social care sector continues to be highly attractive to lenders. It offers an opportunity to diversify portfolios and is regarded as a stable market with strong long-term income prospects, driven by the UK’s ageing population. In addition, care providers are notably acquisitive, creating significant lending opportunities. We are seeing sustained appetite from existing lenders within the sector, alongside new entrants keen to establish a foothold.

The major legislative change in real estate in 2026 will be the introduction of the Renters Rights Act. This will essentially abolish assured shorthold tenancies and alter the rules on obtaining possession. This will impact operators who rent properties to their staff, supported living providers and landlords. It will be important to ensure existing agreements are compatible with the new legislation.

Hazel Phillips, partner and head of health and social care at RWK Goodman comments: “We are optimistic for Adult Social Care in 2026. It remains a buoyant sector where significant investment is being made by UK and overseas investors, which will continue to drive improvement and innovation.”