BUSINESS advisors Pannell Kerr Forster are warning that hundreds of residential and nursing home owners could go out of business if they fail to meet recently-announced Government Minimum Standards.

Strict new regulations due to come into force in the next two years will be expected to ensure that:

Shared rooms will be no more than 20 per cent of overall resident places from 2002.

Single rooms must be at least 10 square metres from 2007.

Each resident must have a minimum of 4.1 square metres of communal space in the home in addition to their room.

Wheelchair access rooms must be at least 12 square metres from 2002.

A recent survey by Laing & Buisson revealed that only 37 per cent of nursing homes and 56 per cent of residential care homes met the 20 per cent shared room test.

Mr Jon Newell, Corporate Recovery Partner with Pannell Kerr Forster, said there had been numerous financial failures in recent years.

"These stem from the numerous challenges faced by the sector, including weak owner managers, funding squeezes on Local Authority spending, shortage of skilled nurses, the National Minimum Wage, the Working Time Directive and ever-increasing regulations imposed domestically and by the EC".

He said that although prospects were positive for homes capable of meeting the new standards, space requirement hurdles would be a key factor in determining those which survived and those which did not.

"While the standards will not be mandatory until 2002, and some not until 2007, we think it imperative that owners and lenders assess and decide the direction of their homes as market forces are likely to quickly impact adversely on their valuation, marketability and occupancy, well before the standards become imposed."

He added: "In a recent receivership of a care home which was undertaken by an insolvency practitioner from Pannell Kerr Forster, the registration authorities refused to re-register to the new owner unless certain improvements were made.

"It indicates very strongly to us that the improved standards are already being used as a benchmark, even before they become mandatory."