Paying for your care home fees if you have a property
When assessing your capital, the council count the value of your property unless it is occupied by any of the following:
Your partner (who is not estranged or divorced from you).
A relative of yours who is aged over 60, or is incapacitated.
A child under the age of 16 years who you are liable to maintain.
A lone parent who is your estranged or divorced partner.
12 Week Disregard
If you are going into a care home on a permanent basis and meet the qualifying criteria, the council will disregard the value of your property for twelve weeks or until the property sells, if sooner.
This means that during this period you will have to contribute an assessed amount towards your care and the council will pay the rest, up to the agreed standard rate for the level of care you need.
To be eligible for this funding you must:
Be assessed as needing to move to a care home on a permanent basis
Have assets, other than the value of the property, that are less than the upper capital limit (currently £23,250)
Have an income that is not sufficient to cover the cost of your fees
The twelve weeks property disregard is mandatory and councils are under a statutory obligation to offer it once they are aware of a person to whom it applies. For more information about 12 Week Disregard please contact your local council (see contact details in ‘Further Information’ section).
Deferred Payments Agreements
If you have not been able to or do not wish to sell your home to pay for your care, you may enter into a deferred payments agreement with the council. This is where the council continues to provide funding towards your care home fees but this contribution is treated as an interest free loan from the council and is secured against the value of your property.
To be eligible for a Deferred Payment Agreement your other assets must be less than the upper capital limit (currently £23,250) and your income must not cover your fees. Councils have discretion over whether to operate this scheme. For example, they may not wish to enter into an agreement where the cost of your chosen care may not be affordable over the long term.
There are possible advantages to entering into a deferred payments agreement. You will benefit from any growth in the value of the property. It may be possible for you to let the property and contribute the rent towards the Care Home fees and, the decision to sell the property can be deferred whilst all options are being considered. If your stay in the care home turns out to be for just a short period the amount of debt accrued may be small enough for it to be paid off and there might be no need to sell the property if it is preferable to keep it.
However, there are also possible disadvantages to participating in a deferred payments agreement. The council will start charging interest on the loan 56 days after the person in the care home dies. There is no set interest rate and some councils charge quite a high rate. You will also need to consider the cost of maintaining and insuring your property and that renting property can be troublesome and rental income is taxable. Also the level of council funding may restrict your choice of care home unless a top-up is affordable over the long-term. Councils may also ask you to pay up-front for the costs of land registry searches and other legal costs.
Whilst participating in a deferred payments agreement, your entitlement to Attendance Allowance continues. Pension Credit with severe disability addition also continues but is reviewed after 26 weeks if the property is on the market. However, if the property has not sold or is not on the market; it may be treated as capital by the Department of Works and Pensions. Subject to its value, entitlement to Pension Credit could cease. For more detailed information about Deferred Payments please speak to your local council (see contact details in ‘Further Information’ section).
Deprivation of Assets
Some people consider transferring money or ownership of their property to someone else, often a family member, so it is not taken into account in the financial assessment. The council can look at any transfers of money or property and there is no time limit as to how far back they can go in considering the circumstances surrounding ‘a disposal’. If they consider that you disposed of money or an asset in order to avoid using the value of it to pay for care, they may consider it to be deprivation of assets. They have to consider both the timing of the transfer and the intention behind it. If they consider deprivation has taken place they can assess you as if you were still in possession of the money or property.