Paragon Development Finance Backs £13.3m Chester Care Home Project
Paragon Development Finance has announced the provision of £13.3 million in development finance to North Bay Group, funding the construction of a brand-new 75-bed care home in Chester. Located on Boundary Lane, the facility is expected to reach completion in late 2027, with groundwork and construction having already commenced in the first quarter of 2026. This significant investment signals growing confidence in the UK care home sector and highlights the critical role that specialist development finance plays in delivering much-needed residential care infrastructure across the country.
Why This Development Matters for Chester and the Wider UK
Chester, a historic city in Cheshire West, is home to a steadily ageing population — a demographic trend mirrored across the United Kingdom. The demand for high-quality, purpose-built care facilities has never been greater, yet supply has consistently struggled to keep pace. Projects like this one represent a direct and meaningful response to that shortfall.
A 75-bed care home is not a small undertaking. At that scale, the facility will be capable of supporting a substantial number of residents, each requiring specialist care, daily assistance, and a safe, comfortable living environment. For local families navigating the difficult process of finding appropriate care for elderly relatives, the arrival of a new, modern facility in the area will be a welcome development.
Beyond the immediate community benefit, the project will generate local employment during both the construction phase and ongoing operations once the home is open. Care homes of this size typically employ dozens of full-time and part-time staff, including nurses, carers, administrative personnel, and facilities management teams.
Paragon Development Finance: A Trusted Name in Specialist Lending
Paragon Development Finance is part of Paragon Banking Group, a specialist lender with a well-established reputation in the UK property finance market. The group has a strong track record of supporting complex development projects across residential, commercial, and specialist sectors — including healthcare and social care properties.
Providing £13.3 million in development finance for a single care home project demonstrates the lender's appetite for well-structured deals in sectors with strong long-term fundamentals. Care homes, in particular, have attracted increasing attention from specialist lenders in recent years due to the consistent and growing demand for residential care services driven by the UK's ageing population.
Development finance of this nature typically covers land acquisition costs, construction expenses, professional fees, and contingency allowances, providing developers with the capital they need to take a project from planning approval through to practical completion. For North Bay Group, securing this funding will have been a critical step in bringing the Chester project to life.
North Bay Group and the Care Home Development Pipeline
North Bay Group is the developer behind the Chester project. Specialist care home developers like North Bay Group play a pivotal role in the UK's social care ecosystem, bridging the gap between planning policy ambitions and real-world delivery. Identifying viable sites, obtaining planning consent, securing finance, and managing construction programmes are all demanding disciplines — and successfully executing a 75-bed care home development from concept to completion requires significant expertise across each of them.
With construction already underway as of early 2026, the project is on a timeline that suggests a well-planned and organised delivery programme. A target completion date of late 2027 gives the construction team approximately 18 to 24 months to bring the building to a standard suitable for CQC registration and operational launch.
The Growing Case for Care Home Investment in the UK
The UK care home sector is facing a structural supply crisis. According to widely cited industry data, the number of older people requiring residential or nursing care is projected to rise significantly over the coming decades, driven by longer life expectancy and the growing prevalence of conditions such as dementia and complex health needs. Yet the development of new care beds has not kept pace with this demand.
Several factors have contributed to this supply gap, including:
- Rising construction costs, which have made viability assessments more challenging for developers and operators alike.
- Planning constraints and the complexity of obtaining consent for new healthcare facilities in many local authority areas.
- A historically cautious approach from mainstream lenders toward care home development, leaving specialist lenders like Paragon to fill the gap.
- Staffing pressures across the care sector, which have affected investor confidence in some markets.
Despite these headwinds, institutional and specialist investors continue to view the care sector as a resilient, needs-driven asset class with stable income potential over the long term. The Paragon and North Bay Group deal in Chester is a clear example of that investment thesis playing out in practice.
What to Watch as the Chester Project Progresses
With construction now underway on Boundary Lane, stakeholders across the local care community, the development finance industry, and the broader property sector will be watching the Chester project with interest. Key milestones to monitor will include structural completion, CQC pre-registration assessments, and the eventual launch of admissions — each of which represents a significant step toward the facility becoming a fully operational home for Chester residents.
For Paragon Development Finance, a successful exit on this loan — likely structured around the sale or refinancing of the completed asset — would further reinforce its position as one of the UK's leading providers of specialist development lending in the care and healthcare property space.
Conclusion
The £13.3 million development finance deal between Paragon Development Finance and North Bay Group is more than a property transaction. It is a meaningful contribution to addressing one of the most pressing social infrastructure challenges facing the United Kingdom today: the acute shortage of quality residential care beds for an ageing population. With construction progressing on schedule and completion targeted for late 2027, the new 75-bed facility in Chester represents a positive step forward — for local residents, for the care sector, and for the specialist development finance market that makes projects like this possible.