Moving into a care home is a stressful time for everyone, and it’s rarely a decision that’s taken lightly. There are also financial implications that need to be considered before making a firm decision on whether or not to move into a care home, some of which will be covered in this article.
In the UK, care is partly funded by the state and partly funded privately, but there are rules on how much you can own when accepting state care.
Your home
Your home is likely your biggest asset, assuming that you own it. However, whether it counts for the purpose of providing care depends on whether your partner is still alive. If your partner is alive and not in care, you can exclude:
- Your home (primary residence)
- 50% of any private pension
- 50% of joint savings
Any other assets, including income, individual accounts, investment homes, stocks, shares and state pension will be included in the calculation. The main exception is investment bonds, which includes life insurance.
However, certain relatives may stay in the house provided they satisfy one of the following criteria:
- They are over the age of 60
- They have a disability
- They are under the age of 16
If a person lives in your home and fulfils the above criteria, it could mean your home is exempt.
If your assets are worth more than £23,250 in total, you will have to pay for the full cost of care. If your assets are below £14,250, you will not have to pay a penny. In between these two numbers is calculated at £1 per week for every £250 of assets that you have above £14,250.
For example, if you have £20,000 of assets:
- £20,000 – £14,250 = £5,750
- £5,750 ÷ £250 = £23
Therefore, you will have to pay £23 per week, which is approximately £1,200 per year.
If I sell my home, how long will the money last?
The answer to this requires a lot of generalisations, as it depends on the cost of care and the value of the home. However, the PayingForCare website estimates that the average yearly cost of care can vary between £26,500 and £36,500, depending on where you are located.
If you need to add in the cost of nursing, expect to pay between £34,500 and £54,500.
The table below shows the average house price and the number of years that house could be expected to pay for either straight care or for care with nursing, based on those averages. This, of course, assumes that the house is owned outright and that there are no expenses associated with selling the home. Naturally, this varies significantly depending on the actual value of the home and the actual cost of nursing.
| Area | Care | Care with nursing | Average house price | Care years | Nursing years |
| East Midlands | £30,000 | £37,500 | £185,694 | 6.2 | 5.0 |
| East of England | £35,000 | £51,500 | £290,341 | 8.3 | 5.6 |
| London | £38,500 | £49,500 | £484,173 | 12.6 | 9.8 |
| North East | £29,500 | £34,500 | £130,838 | 4.4 | 3.8 |
| North West | £26,500 | £40,500 | £158,370 | 6.0 | 3.9 |
| South East | £36,500 | £54,000 | £322,269 | 8.8 | 6.0 |
| South West | £34,000 | £48,000 | £254,081 | 7.5 | 5.3 |
| West Midlands | £30,000 | £43,500 | £191,050 | 6.4 | 4.4 |
| Yorkshire and Humber | £28,500 | £39,500 | £156,781 | 5.5 | 4.0 |
| Wales | £29,500 | £40,000 | £154,398 | 5.2 | 3.9 |
| Scotland | £33,000 | £44,500 | £176,063 | 5.3 | 4.0 |
| Northern Ireland | £27,000 | £35,000 | £130,482 | 4.8 | 3.7 |
England and Wales house prices 1
Scotland house prices 2
Northern Ireland house prices 3
Average care costs by region 4
Can I give my home away?
The council that determines whether you are eligible for care can check your finances to determine whether you are deliberately giving away assets so as to reduce your liability for care. Essentially, if you sell your home at a dramatically reduced price or give it away for free, that could be regarded as self-deprivation of assets.
This means that the council could include the asset in the calculation even if you no longer technically own it. The same applies to large lump sums of money and so on.
Even if the money is in an irrevocable trust (such as a Lifetime Trust), it won’t necessarily protect the money from your care fees.
The council can recover care fees from whoever owns the property if it was judged to have been sold well below market value or given away. It can either use proceedings under the Care Act 2014 or start insolvency proceedings.
What else can I do?
If you have lived in a council house most of your life and haven’t purchased it yet, it may be worth doing so under the Right to Buy scheme, particularly if your partner is still living. This will substantially increase your assets, and reduce the amount of liquid capital (cash) you have. You may also wish to pay off your mortgage – if you have one – and potentially consider serious improvements to your home. Depending on the rules that your council follows, these situations may be allowable, but it’s a good idea to talk to a financial adviser or solicitor who is aware of your specific financial circumstances before following any of these routes.
If you want to keep your home, you could set up a deferred payment agreement. This means that care fees are taken once you sell your home or if you die, whichever is sooner. Councils are rather poor at advertising this, but it can be worth it. The fees charged to councils tend to be lower than those charged to self-funders, and the council then has a duty of care to ensure that you are getting the right level of care for your needs and are not being overcharged.
Selling your home should be a last resort to fund your care, but if you need to do so, we are always here to help ensure that your costs are as low as possible. Talk to a friendly Yopa agent who can value your home, take you through your options regarding selling your house, and help you get the asking price that you’re looking for.
