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

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 how much the council will pay toward 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 not all of your care home fees are included when the council works out what you need to pay. Depending on your finances, you may still need to pay towards the accommodation costs included in your care home fees.

In England and Wales, all of your care fees are included when the council carries out your financial assessment.

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

If you own a house, it’s likely that you’ll have to pay your own care home fees (or the accommodation costs, if you live in Scotland). However, sometimes the value of your home won’t be included in your financial assessment – this is called a property disregard. It won’t 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, 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 one 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 call our Helpline to arrange to speak to an adviser. If you are only staying in a care home temporarily, the value of your home isn’t 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 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 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.

When the 12 weeks are up, the council will review your finances again. Unless you qualify for another type of disregard, 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 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 agree that you need to be in a care home
• not including your home, you have capital of less than £23,250 in England, £18,500 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:

• your house’s value isn’t high enough
• they’d have difficulty recovering the debt in the future
• you don’t 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 figuring 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 recovers the council’s fees.

Short-term loans

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 and 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. However, these loans can be expensive as you usually have to pay fees and a high rate of interest. It’s advisable to get financial advice about these loans first.

Payment plans

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.

Equity release

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.

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 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.

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. Contact our Helpline to arrange to speak to an adviser.

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. 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.