Will I have to sell my home to pay for my care fees?
As we get older it is often a worry about how we will be cared for and how this will be paid for. As many people own their own home, when they move into a care home it can be a worry as to whether their home must be sold. We will take a look at the process and the options available below.
Firstly, the Council will assess your needs to see if you need to move into a care home. There is then an assessment of your finances. This takes of account your income and capital, including any savings, investments and property. The Council’s financial assessment will determine whether you are eligible for help with the fees.
The capital assessment
If you have capital over £23,250 you will be liable to pay all of your care fees until your capital falls below this threshold. If you have capital of less than £14,250 you won’t need to use it to pay for fees but you will have to contribute most of your weekly income. If your capital is between £14,250 and £23,250 a ‘tariff income’ is calculated. This is the income that it is assumed your capital gives you.
If you own a property it is likely this will bring you above the capital threshold and that you will have to pay your own fees. Sometimes the property will not be included in the means assessment, this is known as a property disregard. You may qualify for this disregard in the long term, or in the short term; to give you time to sell the property or make arrangements depending on your circumstances.
If you live at the property alone and nobody else owns the property, the whole of the current market value (minus 10% to cover sale costs) will be taken into account. If the property is jointly owned, only your share is taken into account.
The value of the property must not be taken into account if any of the following people live at the property as their main or only home and they will continue to live there:-
- Your spouse, civil partner or partner;
- A close relative aged 60 or over;
- A close relative who is incapacitated.
This is known as a mandatory property disregard.
The Council may also ignore the value of the property in other circumstances, for example if someone gave up their own home in order to care for you. This is the discretionary property disregard.
The 12-week property disregard
If you permanently move into a care home the Council must not include the value of your property in the financial assessment for the first 12 weeks. This is designed to allow breathing space either to prepare the property for sale or to decide if you want to sell the property at all.
If you are still eligible for financial help after this disregard, the Council will enter into a contract with the care home to pay a proportion of the fees to them. During this time, you must pay the Council any contribution from your income and capital that you have been assessed as having to pay.
- If you are unable to sell your home or you don’t want to sell it, you may be able to get a deferred payment agreement with the Council. The Council will pay your fees and claim the money back later when the home is sold; after you move out of the care home or after your death. This type of agreement is a loan and must be paid back. There may also be interest and administration costs to pay.
The Council must offer a deferred payment agreement if you are assessed as needing to be in a care home, you have capital of under £23,250 (not including your home) and your home is not disregarded. The Council can also choose to offer this agreement to those who don’t meet the eligibility but would benefit from the arrangement.
In order to ensure that the Council will get their money back a charge will be registered at the Land Registry against the title of the property, giving them a right to the proceeds of sale of the property.
- If you are struggling to sell your property within the 12-week period you may also want to consider a bridging loan. This can be used to pay the care fees until the property is sold. It is possible to use a short-term deferred payment agreement as a bridging loan. The agreement is with the Council, but you pay the care home and the Council loans you the money in instalments. The Council must still be able to put a charge on the property and interest and administration fees will accrue. It is also possible to obtain a short-term loan from a private company, although these are likely to be more expensive.
- It is also possible to buy a long-term care bond or a care fees payment plan to cover the fees. The product is like an insurance policy and in return for paying a set premium, the policy pays regular income towards care costs for the rest of the policyholder’s life. One option is to secure a loan against the value of the home which is then used to buy an annuity.
- Releasing equity from your home frees up money from the property without having to sell it through an Equity Release Scheme. The monies can be received as a lump sum, regular payments, or both.
If you own a home with someone else, only your beneficial interest will be included in an assessment.
Working out the value of your share in a property can be complicated and the Council have to consider how much someone would pay to become a joint owner.
It is also important to be aware that if the Council are of the view that property has been deliberately given away in order to avoid paying fees, the property can be treated as if you still own it. This is known as deprivation of assets.
If you would like to discuss care fees further please contact our experienced solicitors here at David Gray.