How much will I have to pay?
If the council agrees that you need to move into a care home, you will usually have a financial assessment to work out whether they will help you to pay your care home fees.
Is the value of my home included?
The financial assessment looks at your income and capital. Capital is your wealth, in the form of money or items with a financial value. For example, savings, investments, land and property.
If you own a property, 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 – called a property disregard. It won’t be included if certain people still live there, including:
- your spouse, partner or civil partner
- a close relative aged 60 or over
- a close relative who is incapacitated.
What happens if I’m leaving my home temporarily?
If you’re still living in it, the value of your main or only home isn’t included when working out how much you have to pay towards your care. If you’re a temporary resident in a care home, or need care in your own home, you won’t need to sell your home to pay for your care.
The 12-week property disregard
If you move into a care home permanently, you may be entitled to 12 weeks free or at a reduced cost. The council must not include the value of your home in your financial assessment for the first 12 weeks after you move in. This is to give you time to think about whether to sell your property or consider other options like deferred payment agreements (see below).
When the 12 weeks are up, the council will review your finances and the value of your home could be taken into account. You’ll need to plan for the end of the disregard period.
Are there alternatives to selling my home?
Other options may be available, depending on your circumstances.
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. This is a type of loan. The council pays your care home fees and then reclaims the money when your property is sold or after your death.
The council must offer you a deferred payment agreement if:
- they’ve assessed your needs and agree that you need to be in a care home
- you have capital under £23,250, not including the value of your home
- your home is not disregarded.
The council can also choose to offer you a deferred payment agreement in certain other circumstances. For example, if your capital is close to £23,250 and they think you’d benefit from an agreement.
The council must be sure that they’ll get their money back. There will probably be administration charges and you may have to pay interest on the loan. You’ll also have to insure and maintain your property.
If you’re selling your property but can’t do this within the 12-week property disregard period, you might want to consider a bridging loan to pay the fees until the property is sold. You may be able to use a short-term deferred payment agreement as a bridging loan. In this case, you pay the care home, and the council loans you the money in instalments, minus any contribution you make from other sources.
You may also be able to get a short-term loan from a private company, but it’s important to take financial advice. You’ll usually have to pay fees and a high rate of interest on the amount you’re borrowing, so it can become expensive.
Other options include immediate need care fee payment plans (also called an Immediate Needs Annuity) and deferred care fee payment plans. 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.
Contact the Society of Later Life Advisers or Unbiased to find an accredited financial adviser in your area. They may charge a fee. Paying for long-term care is a specialist area, so make sure your financial adviser has a CF8 or CeLTCI qualification, which shows they understand the care and support system in the UK.
Rent 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 look into it carefully. Rental income is taxable and you’ll also have responsibilities as a landlord. You can find out more about what’s involved at gov.uk/renting-out-a-property.
What happens if I own my property with someone else?
If you own a home with someone else, only your share of the property can be taken into account 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. Call 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.
You can find legal specialists through the Law Society solicitors.lawsociety.org.uk
If you’re selling your home or entering into any of the arrangements described, this may affect your entitlement to means-tested and other benefits. Contact our Helpline and arrange to speak to an adviser if you’re concerned. Or see our factsheet Care home fees and your property for more information.