Paragon Development Finance Funds £13.3m Care Home in Chester
The UK care home sector has received a significant vote of confidence with the announcement that Paragon Development Finance has provided £13.3 million in development finance to North Bay Group for the construction of a new 75-bed care home in Chester. Located on Boundary Lane, the facility is scheduled for completion in late 2027, with construction having already commenced in the first quarter of 2026. This deal reflects a broader trend of specialist lenders recognising the long-term value and demand-driven stability of the UK care home market.
For developers, investors, and stakeholders across the property and healthcare sectors, this announcement carries important implications. It signals that development finance for care homes remains accessible, that institutional confidence in the sector is strong, and that Chester is emerging as a key location for purpose-built elderly care facilities.
About the Project: A 75-Bed Care Facility on Boundary Lane
The development on Boundary Lane in Chester will deliver 75 purpose-built care beds designed to meet growing local and regional demand for high-quality residential care. With construction beginning in early 2026 and a target completion date of late 2027, the project represents an approximately two-year build programme — a timeline typical for care homes of this size and specification.
North Bay Group, the developer behind the scheme, has secured a substantial financial package from Paragon Development Finance to bring the project to fruition. While specific design details have not been publicly disclosed, care homes of this scale are typically designed with resident wellbeing at their core, incorporating en-suite rooms, communal lounges, dining areas, landscaped gardens, and specialist facilities for dementia or nursing care where required.
Chester, as a location, offers strong fundamentals for care home investment. The city benefits from an ageing population, strong transport links, and an established local economy, all of which support the long-term operational viability of residential care facilities.
Who Is Paragon Development Finance?
Paragon Development Finance is a specialist lending arm of Paragon Banking Group, one of the UK's established financial institutions with a strong track record in buy-to-let mortgages, specialist lending, and development finance. The development finance division focuses on providing funding solutions for residential and commercial property developers, including projects in the healthcare and care home sectors.
By backing this Chester development, Paragon is demonstrating a clear appetite for care home lending — a sub-sector that has attracted growing interest from specialist lenders in recent years due to its resilience, government-backed demand drivers, and long-term income potential for operators. Development finance lenders with expertise in this niche are increasingly valuable partners for developers seeking to navigate the complexities of healthcare construction.
Why the UK Care Home Market Continues to Attract Investment
The decision by Paragon to back this £13.3 million scheme is not made in isolation. The UK care home sector faces well-documented structural supply challenges, and new developments like the Chester project are a critical part of addressing them. Several key factors are driving investment into the sector:
- An ageing population: The UK's population of people aged 75 and over is projected to grow substantially over the coming decades. This demographic shift creates sustained, long-term demand for residential care beds that the existing supply pipeline is struggling to meet.
- Undersupply of modern facilities: A significant portion of the UK's current care home stock is ageing and increasingly unfit for modern care standards. Purpose-built, contemporary facilities command premium fee rates and higher occupancy levels, making them commercially attractive for developers and operators alike.
- Lender appetite for specialist healthcare assets: As traditional residential development margins have come under pressure, specialist lenders have turned their attention to sectors where demand fundamentals are robust. Care homes, with their government and local authority funding streams, represent a more predictable operational environment than many other asset classes.
- Planning and regulatory tailwinds: The UK government has increasingly recognised the need to expand social care infrastructure, and planning authorities in many areas are supportive of well-designed care home developments that address local need.
North Bay Group: A Developer with Sector Expertise
North Bay Group's involvement in this project underscores the role that specialist care home developers play in delivering much-needed new capacity. Delivering a care home is considerably more complex than a standard residential development. It requires an understanding of Care Quality Commission (CQC) registration requirements, operational design standards, staffing models, and the specific needs of elderly residents. Developers with experience in this sector are therefore well-positioned to attract lender support and to deliver projects that achieve strong operational outcomes post-completion.
The partnership between North Bay Group and Paragon Development Finance illustrates how experienced developers and well-capitalised lenders can work together to bring forward healthcare infrastructure at a time when it is most needed.
Development Finance for Care Homes: Key Considerations
For other developers looking to enter the care home sector, or to expand their existing portfolios, this deal offers several instructive takeaways. Securing development finance for a care home typically requires a lender with specific sector knowledge, as the underwriting of such projects involves assessing not just the construction risk but also the operational viability of the finished facility. Lenders will typically scrutinise planning consent, operator credentials, projected fee income, local market demand, and the developer's track record.
Key factors that typically support a successful care home finance application include a credible operator partner or pre-agreed operating agreement, robust planning permission, a detailed construction programme with a fixed-price build contract, and a clear exit strategy — whether through sale to an investor or long-term operational income.
Chester's Growing Role in UK Care Home Development
Chester is increasingly recognised as a strong market for care home development. The city's demographics, including a significant and growing elderly population, combined with its economic profile and transport connectivity, make it an attractive location for operators and investors. The Boundary Lane development adds meaningful capacity to a local market where demand for high-quality residential care is expected to grow through the late 2020s and beyond.
As the project progresses toward its late 2027 completion date, it will be watched closely by others in the sector as an example of how development finance, specialist developers, and well-chosen locations can combine to deliver the care infrastructure that the UK urgently needs.
Conclusion: A Deal That Reflects Broader Sector Momentum
The £13.3 million development finance package provided by Paragon Development Finance to North Bay Group for the Chester care home is more than a single transaction. It is a tangible demonstration of lender confidence in the UK care sector, a signal of ongoing demand for purpose-built care facilities, and a contribution to addressing one of the most pressing social challenges facing the country. With construction underway and completion targeted for late 2027, the Boundary Lane development is a project to watch — and a blueprint for how collaborative, well-structured development finance deals can deliver real social value alongside commercial returns.