If you’re moving into a care home, you might be wondering whether you’ll need to sell your home to pay for your care. This is sometimes the best option, but other options could be available, depending on your circumstances.
If the council agrees that you need to move into a care home, you’ll usually have a financial assessment. This looks at your income (such as pensions or benefits) and capital (such as savings or property) to work out whether the council will pay toward your care home fees.
If you own a house, it’s likely that you’ll have to pay your own care home fees. However, sometimes the value of your home won’t be included in your financial assessment – this is called a property disregard. For example, it won’t be included if certain people still live there, such as:
There may be other disregards too, depending on your situation. The rules can be complicated, so call an expert for more information.
If you’re a temporary resident in a care home, you won’t need to sell your home to pay for your care. If you’re still living in it, the value of your home isn’t included when working out how much you must pay towards your care.
If you move into a care home permanently and you're not paying for your own care, the council must not include your home's value in your financial assessment for the first 12 weeks after you move in. This is to give you time to sell your property or arrange other options, like a deferred payment agreement.
During the 12 weeks, you may be able to get help from the council to arrange and pay for your care in a care home. You may still have to contribute towards your care costs.
When the 12 weeks are up, the council will review your finances. The value of your home could then be included in the financial assessment, so you’ll need to plan for when this disregard ends.
Deferred payment agreements
If you’re unable to sell your home or you don’t want to sell it within your lifetime, ask your council about a deferred payment agreement. The council may agree to pay your care home fees and then reclaim the money when your property is sold or after your death. You may also be able to get a loan from them to pay your care home fees.
The council must offer you a deferred payment agreement if:
The council can also choose to offer you a deferred payment agreement in certain circumstances. For example, if your capital is close to £23,250 and they think you’d benefit from an agreement.
The council can decide whether to agree to your request. In some circumstances, they may refuse. For example, if:
There may be administration charges and you may have to pay interest on the loan. You’ll also have to insure and maintain your property.
You may be able to request a short-term deferred payment agreement as a bridging loan. This could be helpful if, for example, you're struggling to sell your property. With a bridging loan, you pay the care home and the council loans you the money in instalments, minus any contribution you make from other sources.
Another option may be an immediate need care fee payment plan (also called an Immediate Needs Annuity) or deferred care fee payment plan. These are basically insurance policies. In return for a lump-sum investment, the policy pays a regular income towards care costs. You may be able to use the value of your home to secure a loan so you can buy an annuity.
You could also consider equity release. This is a way to free up money from your home without having to sell it. There are disadvantages to this, so you should seek independent financial advice.
Renting out your home
You could rent out your home and use the income to pay your care home fees or to reduce the amount you borrow through a deferred payment agreement. However, this can be time-consuming and there are costs involved, so investigate it carefully. Rental income is taxable, and you’ll also have responsibilities as a landlord. Visit Gov.uk to find out more about renting out a property.
Check your benefits
If you’re selling your home or entering into any of the arrangements described, your entitlement to means-tested and other benefits may be affected.
If you own a home with someone else, only your share of the property can be considered in the financial assessment. The council will have to work out how much it’s worth. They can’t just value the whole property, divide up the amount and say that is the value of your share. They have to consider how much someone would pay to become a joint owner instead of you. There are many factors that could affect the valuation.
If one of the other owners offers to buy your share, talk to the council first to make sure they consider the offer acceptable. There are rules about what you can do with your assets.
If you would like more information about selling your home or just want to know what it might be worth, please contact us on 0121 430 4448 or email@example.com.
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