Do I have to sell my home to pay for residential care?

If the council agree 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 how much the council will pay towards your care home fees.

The financial assessment is different depending on where you live. For example, in Scotland, personal and nursing care is free if you qualify for council support. This means that when the council work out what you need to pay, they will not include all your care home fees. But you may still need to pay towards the accommodation costs included in your fees.

In England and Wales, the council include all your care fees in your financial assessment.

In each nation, the amount of capital and income that you are allowed to keep is slightly different. See our page Paying for care in a care home for more information.

If you own your home, it’s likely that you’ll have to pay your care home fees – or the accommodation costs if you live in Scotland. However, sometimes the value of your home will not be included in your financial assessment. This is called a property disregard. 

Your home will not be included if, for example, certain people still live there, such as:

• your spouse, partner or civil partner
• a dependent
• a close relative aged 60 or over
• a close relative who is:
  • receiving Attendance Allowance, Pension Age Disability Payment, Disability Living Allowance, Personal Independence Payment, Adult Disability Payment, Incapacity Benefit, Severe Disablement Allowance, Armed Forces Independent Payments, Constant Attendance Allowance or a similar benefit, or
  • not receiving any of these benefits but would meet the criteria for one of them.

There may be other disregards too, depending on your situation. The rules can be complicated, so contact our Helpline to speak to an adviser. 

If you’re only staying in a care home temporarily, the value of your home is not included when working out how much you have to pay towards your care.

If you move into a care home permanently, the council must not include your home's value in your financial assessment for the first 12 weeks. This is to give you time to sell your property or arrange another option, like a deferred payment agreement.

During those 12 weeks, you may be able to get help from the council to pay for your care in the care home. Depending on your income and other capital, you may still have to contribute some of your own money towards your care home fees.

At the end of the first 12 weeks, the council will assess your finances again. You’ll need to plan for this because, unless you qualify for another type of disregard, the council may then include the value of your home. 

Our factsheet Care home fees: Property disregards and deferred payments has more information about property disregards.

If you’re unable to sell your home or you do not want to sell it within your lifetime, ask your council about a deferred payment agreement. The council may agree to pay your contribution towards 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, so you can pay your care home fees directly to the care home yourself. 

The council may offer you a deferred payment agreement if:

• they’ve assessed your needs and have agreed that you need to be in a care home
• not including your home, you have capital of less than £23,250 in England, £21,500 in Scotland or £50,000 in Wales
• your home is not disregarded
• your income is not enough to cover what you need to pay towards your care home fees.

The council can also choose to offer you a deferred payment agreement in certain circumstances – for example, if your capital is close to the capital limit 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:

• the value of your house is too low
• they’d have difficulty recovering the debt in the future
• you do not fully accept their terms.

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. Your council must take into account the cost of maintaining your property when working out how much you must pay towards your care costs.

In Scotland, your council may opt for a charging order instead, which is a legal charge on your property. This means that the council will be paid back if or when your property is sold. If you are unable to sell your home, or choose not to, the charging order ensures that the council will get their money back.

You may be able to ask for a short-term loan to pay your care home fees. This could be helpful if, for example, you're struggling to sell your property. 

Many people use a loan-style deferred payment agreement with the council to help in this situation. Your agreement is still with the council but, instead of the council paying the care home directly, you pay the care home. The council loans you the money in instalments, minus any contribution you make from other sources.

You may also be able get a short-term bridging loan from a private company. These loans can be expensive because you usually have to pay fees and a high rate of interest. It’s advisable to get financial advice about these loans first. 

Your council should be able to provide information about where you can get financial advice. You can also search for independent financial advisers at Society of Later Life Advisers or Unbiased.

Deferred payment plans may not be the best option for you, but there are other options available for paying care home fees.

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 for the rest of your life. You may be able to use the value of your home to secure a loan so you can buy an annuity. MoneyHelper has more information about this type of plan.

You could also consider equity release. This is a way to release money from your home without having to sell it. For more information, read our webpage on equity release.

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 look into 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.

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 cannot 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. 

See our factsheet Care home fees: Property disregards and deferred payments for more information, or contact our Helpline if you need advice.

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.