Update: In September 2021 the government announced a plan to cap the cost of social care with the aim being that nobody needing care should be forced to sell their home in their lifetime to pay for it. The £86,000 cap will come into force in October 2023. However, this does not mean that the family home will not have to be sold to cover care funding costs once a person dies.
A deferred-payment agreement (DPA) is a government scheme introduced in 2015, which is a legal arrangement with a local council to cover care costs up front and secures these against a person’s home at a fixed-interest rate. When the person dies, their home is sold to repay the loan – but they will not have to sell it before then to pay for a care home. This is similar to a lifetime mortgage or equity release so is a major financial decision and it is far from clear that a DPA can be used for live-in care so a lifetime mortgage is likely to offer more flexibility than a DPA.
You can read more about paying for later-life care here.
You can read the BBC’s Reality Check article on social care here.
One of the biggest headaches for anyone who is planning to move into a care home comes with deciding what to do about their main financial asset, which is usually the family home. And that is often a jointly owned property.
If you live alone and are the sole owner of the property then the issue is relatively simple once you have decided that a care home is the way forward. The value of your home (above the national threshold) may be included in any assessment of your financial assets by your local council to ascertain if and how much of your care can be funded.
Of course, you can ensure your home is protected by looking into whether care in your own home would be a better option.
Do you have to sell your home?
If you own assets totalling above £23,250 in England and Northern Ireland, £28,000 in Scotland or £50,000 in Wales (residential care only) then you will be required to at least part-fund your care home fees following a local authority assessment of your financial assets. This means that in most cases you will have to sell your home.
Where there is a jointly owned property and someone else is living in the property: a spouse, partner or relative, your home should not be included in the means test. However there are caveats to be considered. For example, if you and a partner have equal shares in a home which you no longer share and there is no mortgage left on the property your share will be considered as being 50% of the value. If the share of the property value is unequal your assets will be calculated accordingly.
Circumstances which exclude your property from a means test
If your spouse or partner still lives in the home then it is not included in the means test, provided they are not estranged or divorced from you. But if you are separated or divorced and your partner still lives in the home to help care for a child under 18 this excludes the property from a means test. If there is a disabled relative or a relative aged over 60 who shares the home with you permanently, this also excludes the home from a means test.
If your move into a care home is only temporary, your home will not be counted towards care home fees and if you decide to engage in-home care services your property will not be included in any means test.
If your property is to be included in a means test your council must ignore it for the first 12 weeks of your residential care period to give you time to decide what to do, sell the property or find a tenant for instance. Or you could apply to your local authority for a Deferred Payment Agreement which means they lend you an amount of money from the value of your property to fund your care home fees. This is then clawed back from the sale of the property after your death.
This could enable a partner to continue to live in the property.
The issue of whether to go into a care home or stay in your own home to receive care is complex. Make sure you plan well in advance if you can.
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The rules about how much people will have to pay for their own care will change from October 2023 and the government will cap the amount anyone has to pay at £86,000 in their lifetime. But, how, in reality can that £86,000 be paid without selling the family home?
This post has been updated to include links to further information on this website about the different ways to pay for care in later life including local authority Deferred Payment Agreements and lifetime mortgages (i.e. equity release). Depending on individual circumstances you could be better off remaining in your own home and having a live-in carer.
Interesting article but what I need to find out is what happens when the property is jointly owned but only one of the owners lives there.
Also what happens if you go into full time care before the £86.OOO cap comes into force in October 2023