We review Intercare’s care room investment paying up to 10% per year

Intercare offers unregulated care home investments paying “assured rental income” of up to 10% per year for investing in care home bedrooms.

Intercare guarantees to buy the bedroom back off the investor after 3, 5, 9, 15 or 20 years; the guaranteed purchase price includes an uplift of an additional 3% per year for the first 5 years, and 2% per year for the subsequent 15.

Investments of £75k – £100k start at 8%pa rental income and escalate to 10%pa over the first five years. Investments of £100k start at 9%pa and £125k at 9.5%pa, again escalating to 10%pa. Investments of £150k pay 10% throughout.

Intercare is currently being promoted on Facebook by unregulated third-party introducers.

Who are Intercare?

Intercare inaccurately names its corporate identity as “Intercare Ltd” on its website. As far as I can tell there is no such company. There are about a dozen Intercare companies judging by Companies House data for its owner, Dr Sohail Qureshi; the top company appears to be Intercare Group Limited, which was incorporated in February 2020. Due to its young age it is yet to file accounts.

CEO Dr Sohail Qureshi (full name Muhammad Sohail Akhtar Qureshi) is the sole “person of significant control” although as of March 2020 he is not a majority shareholder. No other significant shareholders have been declared.

How safe is the investment?

Intercare claims that the fact that it is paid to house elderly people by local councils “provides a secure source of fee income”. The fact that Intercare receives care fees from local government does not make the investment secure. Intercare has to receive enough money from the Government to pay investors returns of up to 13% per year after its own costs (including commission paid to third party introducers) for the investment not to default.

Intercare say there are two options for investor to exit, either the aforementioned “guaranteed” buyback or selling to a third party; however, selling a care home room to a third party is unlikely to be realistic if Intercare are selling care home rooms at the same price with a promise of up to 13%pa returns attached.

Should Intercare run out of money to pay the 10% returns or guaranteed buyback and default, there is a significant risk that investors will not be able to sell their rooms for as much as they paid for them to a third party. A room in a care home to which the care home owner controls access is a very different asset from a buy-to-let flat to which the investor controls access.

In the extreme case, the investment in the care home room could be worthless if the care home shuts, meaning the room generates no income, and nobody is willing to buy out investors who own leases on individual rooms in order to take it over.

Investors relying on the “guarantees” provided by Intercare should hire professional due diligence specialists (paid by themselves, not Intercare) to confirm that in the event of a default, the assets of Intercare would be valuable and liquid enough to compensate all investors. Investors should not simply rely on what Intercare tells them about their assets.

Should I invest in Intercare?

This blog does not give financial advice. The following are statements of publicly available facts or widely accepted investment principles, not a personalised recommendation. Investors should consult a regulated independent financial adviser if they are in any doubt.

As with any investment in an unlisted micro-cap company, this investment is only suitable for sophisticated and/or high net worth investors who have a substantial existing portfolio and are prepared to risk 100% loss of their money.

Any investment offering returns of up to 13% per year is inherently very high risk. As an individual, illiquid security with a risk of total and permanent loss, Intercare’s care home rooms are much higher risk than a mainstream diversified stockmarket fund, let alone cash accounts.

Before investing investors should ask themselves:

• How would I feel if the investment defaulted and I lost 100% of my money?
• Do I have a sufficiently large portfolio that the loss of 100% of my investment would not damage me financially?
• Have I conducted due diligence to ensure Intercare’s “guarantees” can be relied on?

If you are looking for a “guaranteed” investment, you should not invest in leases on care home rooms with a risk of up to 100% loss.