In theory and in principle there can be no downside to this announcement when it comes into effect. Yet what may happen in the interim period may have many downside, both during this time and after it becomes operative.
Independent care homes will have reasons why evictions take place and these will be many and varied. Let's take the example from a current thread here of cost pressures on independent care home providers. Councils have (correctly) raised the quality threshold in recent years which has led to additional costs for providers by placing additional and higher stipulations on them. However, the funding costs have failed to keep up with these 'additions' and in many cases even with inflationary pressures from salaries and from the significant rises in utility expenditure costs (17, 22 and 20% over last three years from memory.)
The basic business principle of having enough expenditure to meet these cost pressures may mean that independent care homes will take the decision to leave the market. There is a link with human rights loopholes as ICH providers may have been using eviction of say publicly (under)funded residents to accpt in their place privately and thus fully funded residents. While this may be abhorrent and unacceptable practise it may be a cause for the rise in evictions or at least the increased focus upon them. So, in one (abhorrent) respect this could be seen as yet another 'constraint' on the provision of independent care homes. It may also be the case that there may be an increase in evictions ahead of this new legislation.
I have no other information on evictions in independent care homes and all the above is only speculation. As unpalatable as this speculation is, the financial implications for ICHs does reflect reduced income and rising expenditure costs in significantg terms. This in a context of rising elderly population makes for an increased need for care homes but if the funding does not follow then their supply will diminish and priority for admission is likely to shift toward privately and thus fully funded residents. That unfortunately is an economic reality. If independent care homes are not allowed to pick and choose residents (and dodgy evictions currently allow this) then this decision, whilst morally and legally correct, may impinge upon the economic survival of ICHs.
The above speculations may be why the government has (to qoute from the article) "...to date resisted campaigners efforts to force a decision on the issue, through an amendment to the Health and Social Care Bill." The article states that the vast majority of elderly residents are placed in ICHs (rather than diminishing council run establishments. Why are council run care establishments diminishing in number? Because councils cannot afford to run them!
In summary, this proposed move does not in itself lead to reduced provision with all the downsides that brings. But the context of it coming on top of real-term significant reductions in funding and ral-term significant increase in costs may just provide the catalyst for the reduction in supply of care homes.