The Local Authority Financial Assessment
Before any financial contributions are determined, your local council will perform a care needs assessment to confirm that you require care, whether at home or in a residential setting. If a care home is deemed necessary, they will conduct a financial assessment (or 'means test') to calculate how much you must pay towards the fees. This assessment considers your income and your capital, including savings, investments, and any property you own.
In England, the financial thresholds for 2024-2025 are that if your capital is above £23,250, you are likely expected to fund your own care in full. If your capital is below £14,250, you will likely receive maximum support. For amounts between these figures, the council will contribute, but you will also pay a contribution based on a 'tariff income' calculation. In England, a property's value is not included in the financial assessment for at-home care, only for residential care.
When Your Property is Disregarded
There are several key circumstances where the value of your property is disregarded in the financial assessment for a permanent care home stay. If any of the following people still live in your home after you move into residential care, its value will not be counted:
- Your spouse or civil partner
- A close relative who is over 60 years old
- A close relative who is disabled or incapacitated
- A child of yours who is under 18
- Your estranged or divorced partner if they are a lone parent still living there
It is important to note that these are national rules, but councils have some discretion, and it is always worth discussing your specific situation with them. The rules vary in Scotland, Wales, and Northern Ireland, so individuals in these nations should check the specific guidelines for their region.
The 12-Week Property Disregard
For a permanent move into a care home, there is a helpful provision called the '12-week property disregard'. This means the council will not include the value of your main or only home in the financial assessment for the first 12 weeks. This provides a vital grace period for you and your family to decide how to fund your care long-term, which could involve selling the property, arranging a deferred payment agreement, or other options. However, you will still need to contribute from your income and any other capital during this time.
If the property is sold before the 12 weeks are up, the disregard ends on the date of sale and the proceeds are then included as capital in the financial assessment. If you think you might qualify for this disregard, you should inform the local authority before becoming a permanent resident to ensure a smooth process.
Comparing Methods for Covering Care Home Costs
| Method | Pros | Cons |
|---|---|---|
| Selling Your Home | Releases equity immediately; provides substantial funds; no accumulating debt. | Loss of asset; emotional distress; market fluctuations affect value; could leave no inheritance. |
| Deferred Payment Agreement (DPA) | Allows delaying sale until a later date or death; avoids immediate disruption; property value may rise. | Loan accrues interest and administrative costs; house used as security; debt must be repaid eventually. |
| Renting Out Your Home | Provides regular rental income to cover fees; property remains an asset; potential long-term investment. | Taxable income affects benefits; landlord responsibilities; risks of tenants and property damage. |
| Equity Release | Accesses funds without selling; no debt repayments until moving or death; can be combined with rental income. | Accruing interest reduces equity; high costs; must be over 55; reduces inheritance. |
Deferred Payment Agreements (DPAs)
A Deferred Payment Agreement is a voluntary scheme offered by councils that is a valuable alternative to a swift property sale. If you are eligible, the local council will pay an agreed amount towards your care home fees on your behalf. This amount then builds up as a debt secured against your property. The debt, plus interest and any admin fees, is only repaid when your property is eventually sold, or from your estate after your death.
To be eligible for a DPA in England, you typically must have savings and capital below £23,250 (excluding the value of your home), own your property, and have been assessed as needing permanent residential care. DPAs provide immense peace of mind for families, ensuring no one is forced into a rushed, distressed property sale.
The 'Deliberate Deprivation of Assets' Rule
Thinking of giving your home away to family to avoid care fees? Be extremely cautious. The local authority has rules against 'deliberate deprivation of assets', where you intentionally reduce your assets to reduce or avoid care costs. If they suspect this, they can assess you as if you still owned the asset, leaving you liable for fees you no longer have the means to pay. A financial assessment will consider whether you could reasonably have foreseen the need for care at the time of the asset transfer. This can have severe and unintended consequences, so it is crucial to seek independent financial and legal advice.
NHS Continuing Healthcare Funding
If your primary needs are health-related, rather than social care, you may be eligible for NHS Continuing Healthcare (CHC). This funding is not means-tested, and if you qualify, the NHS will cover the full cost of your care, including accommodation. Eligibility is based on a thorough assessment of your health needs. If you believe your or a loved one's needs are primarily for healthcare, requesting a CHC assessment should be a priority.
Conclusion: Navigating Care Fees and Your Property
The question of whether you have to sell your house to pay for care in the UK is complex, with the answer depending heavily on your individual circumstances. No one can force you to sell your home, and there are several options available to mitigate the financial burden. The first step is always to contact your local council for a full care needs and financial assessment. Consider the alternatives to selling, such as a Deferred Payment Agreement, and always seek independent financial advice to make the best decision for your long-term financial security. Understanding the rules is the most powerful tool you have in this process. For more information, please consult official government sources, such as the Age UK guidance on care home fees.
