Buying or Selling a Care Home: CQC Due Diligence Explained

Buying or Selling a Care Home: CQC Due Diligence Explained

Whether a care home sale is a CQC ‘sale and transfer’, a change of control, or something else determines the registration path, the staff outcome and what a buyer should check. Here is how CQC’s own process works, and what due diligence covers beyond compliance.

How a care home sale is structured decides which CQC process applies. A share sale keeps the same registered legal entity, so CQC needs a notification of the change to directors, officers or the nominated individual, not a new registration. A sale of the business or location itself is what CQC calls a “sale and transfer”, where the incoming provider applies to register (or add the location) and the outgoing provider applies to change or cancel its registration, with the two applications linked and assessed together. Staff protection under TUPE depends on the transaction, not on which CQC process applies.

A care home sale is a regulated-business transaction, and CQC has a defined process for it, not an ad hoc notification. This guide follows CQC’s own “buy, sell or transfer a registered business” guidance and Regulation 15, sets out what a buyer should check beyond compliance, using recognised due diligence themes from care sector advisers, and flags where TUPE and tax questions need your own legal and financial advisers.

Which CQC Process Applies Depends on the Structure

CQC’s Regulation 15 requires written notice, as soon as reasonably practicable, if a registered person ceases to carry on or manage the regulated activity, or where the service provider is a company, a change of director, secretary or other officer, or a change of nominated individual (CQC: Regulation 15). That is the mechanism a share sale uses: the same registered provider stays in place, but its directors and nominated individual change.

CQC’s “Sale and Transfer” Process

When a business or location itself is bought, sold or transferred, CQC calls this a sale and transfer. It involves an outgoing provider (currently registered, stopping the regulated activity at one or more locations) and an incoming provider (new or existing, applying to take it over). CQC says both providers should apply around the same time; it asks each for the other’s details, then links and assesses the applications together. Regulated activities must keep being delivered to the public throughout (CQC: Buy, sell or transfer a registered business).

• Buying, not yet registered: complete the provider application form, quoting the provider ID of the business being bought, plus the additional information form for your sector, and email everything with supporting documents to CQC.
• Buying, already CQC registered: add the location to your existing registration, complete an insurance form and the sector additional form, and update your statement of purpose. See CQC statement of purpose.
• Selling part of the business, continuing to provide regulated activity: apply to change your registration.
• Selling the whole business, stopping regulated activity: you must cancel your CQC provider registration.

CQC checks that the outgoing provider is still delivering the regulated activity, that the location stays the same with a continuing regulatory history, and that no one provides care while unregistered. It does not treat a change of location, buying a location for future use, or an NHS dental contract transfer as a sale and transfer. On request, CQC can issue a position statement letter confirming it does not expect to refuse the application or set non-routine conditions, though it can still review new information before completion. Tell CQC as soon as possible if the completion date changes, since serious delays can mean CQC has to reassess.

Registered managers during a sale and transfer

The incoming provider must make sure managers are in post and registered at the location. A registered manager already there can apply to continue their registration under the incoming provider, cancel their manager registration, or remove the location if they are staying with the outgoing provider instead. See changing a registered manager.

Timing Registration Against Completion

For a sale and transfer, CQC’s registration process is a precondition the transaction has to be built around, not a formality that follows completion. CQC says registration can take a few months, so build that into deal planning from the outset (how to register with CQC). In practice this often means exchanging contracts first, with completion timed to align with CQC confirming registration, rather than trying to complete everything in one step.

Staff and TUPE

Whether staff transfer automatically depends on employment law, not on which CQC process applies. GOV.UK’s guidance on business transfers and TUPE says that when a business changes owner, employees may be protected: their jobs, terms and continuity of employment usually transfer, with exceptions such as redundancy or insolvency, and this can apply regardless of business size (GOV.UK: Business transfers, takeovers and TUPE). Whether TUPE applies to a particular deal is a question for your own legal adviser, Acas, Citizens Advice or, for employees, a trade union representative; it is not something CQC’s registration process decides.

Compliance Due Diligence: What to Ask For

• Recent inspection reports and current ratings, and the reasoning behind any rating below Good.
• The notifiable events log: what has been reported to CQC, and the pattern it shows. See notifiable events.
• Complaints records and how they were actually resolved.
• Staffing and training records, and any Regulation 18 (staffing) or fit and proper persons concerns. See fit and proper persons.
• Safeguarding history and referral records.
• Evidence that concerns from a previous inspection were genuinely addressed, not just acknowledged.
• Confirm the service is actually CQC registered and check its current status yourself. See how to check if a provider is CQC registered.

A strong financial position sitting alongside a thin or defensive compliance history is not the lower-risk purchase it can look like on paper. A rating from several years ago can also be dated: care sector advisers note that a service rated Good some years back can decline through changes in management, staff turnover or deferred maintenance well before its next assessment (attributed view; verify current status yourself rather than relying on the last published rating). See how often CQC inspects for how re-assessment timing actually works.

Beyond Compliance: Commercial and Operational Checks

Care-sector due diligence advisers and property consultants commonly look at areas outside CQC compliance as well. These are general due diligence practice, not CQC requirements, so treat them as a starting checklist for your own advisers:

In an asset-style transaction, existing contracts generally do not transfer automatically; they typically need to be individually assigned or novated, needing the seller’s agreement and often the counterparty’s consent too. Local authority funding contracts can take real time to novate, and this is a common source of unplanned delay, so start it early rather than three weeks before planned completion.

What Structure Means for Liabilities

Buyers and sellers also choose structure partly on liability. In a share sale the buyer generally takes on the company as it stands, including its existing liabilities and contracts, while in a sale of the business or assets the parties can often agree which liabilities transfer and which stay with the seller. This is a general company law and tax point, not a CQC one, so take your own legal and tax advice on structuring, including Capital Gains Tax and other implications for the specific deal.

Sources: CQC: Buy, sell or transfer a registered business · CQC: Regulation 15, notice of changes · CQC: Changes to registered details, nominated individuals, officers and directors · GOV.UK: Business transfers, takeovers and TUPE · CQC: Register as a provider