Anyone with assets worth over £23,250, including property, is expected to meet the cost of care in full. Consequently, owning your home is one of the major reasons why people fail to qualify for support with the cost of care in old age.
Selling a much-loved home can be a highly emotional and difficult decision. But it is one that many people face each year to help pay for long-term care.
The authorities are wise to people attempting to rid themselves of property to reduce the value of their assets, and may ask detailed questions about current and past property ownership. Strategies such as bequeathing a property to offspring or putting it in trust may be viewed as a deliberate attempt to deprive yourself of capital and such assets may still be included in the means test at the local authority’s discretion.
When property is disregarded
A property can be excluded from the means test if it continues to be the home of someone else.
This can include:
- a spouse or partner;
- a relative who is over 60 or incapacitated;
- a minor under 16 who is dependent on the person in care;
- a separated lone partner with responsibility for a minor;
- in some circumstances, someone who gave up their own home to look after the person now going into care.
Deferred payments agreement
There may be some scope to come to an arrangement with the local authorities. Under a ‘deferred payments agreement’ the local authority may agree to help with the cost of care and will look to recoup these costs when the property is eventually sold.
The 12-week property disregard
Even if it is agreed that a property must be sold to help with the cost of care, homeowners are given a little breathing space.
Provided other assets fall below the upper capital limit of £23,250 (£22,750 in Scotland, £22,000 in Wales), the local authority will pay care home fees for up to 12 weeks to allow time to sell the property.
If the property still isn’t sold after 12 weeks, the local authority will move to a deferred payments agreement – as above.
Using property to fund care
There are a number of ways in which property could be used to help fund care.
| Equity release |
As long as someone is still resident at the property, this enables funds to be released while still allowing the home to be retained. |
| Rental |
Letting out property could deliver a regular income stream but owners need to be sure the net income after bills and management costs will be enough to cover care bills. |
| Capital investment |
Once sold, the proceeds of the property could be invested to generate a regular return.
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| Other schemes |
Our Care Plans can allow borrowing against the property, removing the pressure to sell quickly.
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