New models of care are needed following the closure of long-stay mental handicap hospitals. Based on an evaluation of a recently established assessment and treatment service in south-east England, this paper is concerned with the costs and likely benefits of different patterns of services for people with mild learning disabilities and severely challenging behaviour. Different models of provision are compared in terms of their costs and quality of life opportunities for clients. The assessment and treatment services provided a better understanding of the care needs, and achieved a reduction in challenging behaviours. It was therefore possible to give access to care settings closer to a normal life. For approximately 25% additional expenditure, 20 out of 34 clients who received the service moved to community placements, including three who had been referred following a breakdown in the community. If community care is to be implemented as a policy for clients with learning disabilities and serious challenging behaviours, it is necessary to recognise the financial implications. Better quality of life opportunities for this client group are associated with higher costs. When seen in the dynamic context of the costs and quality of life opportunities of the subsequent care, a high cost assessment and treatment service may be a good investment. On current evidence, the additional benefits of community homes, with a closer association with the local community, and greater freedom for clients is bought only at quite a high cost.