How to Avoid Selling Your House to Pay for Care

In the UK, the prospect of selling your home to pay for care is a genuine concern for many families, particularly as life expectancy rises and more people require residential or nursing care in later life. Care home fees can be substantial, often exceeding £1,000 per week, and depending on your financial circumstances, your home may be included in your means test for local authority funding. However, there are several legal and strategic ways to reduce the risk of having to sell your house to pay for care, though they must be approached carefully and with full understanding of the rules.

Knowing your rights, how the care system works, and what planning options are available can help you make informed decisions and protect your home where possible.

Understanding How Care is Funded in the UK

In England, if you need residential care, the local authority will carry out a financial assessment to decide who pays for it. If your total capital is above £23,250, including the value of your home, you will usually be expected to pay the full cost of care. Between £14,250 and £23,250, you may be eligible for partial funding. Below £14,250, the local authority pays most of the cost, but you may still contribute from income.

Your home is not always included in the assessment. It is excluded if your spouse or partner still lives in it, or if a close relative aged 60 or over, or someone who is disabled or under 16, is living there. However, if you are single or widowed and moving permanently into care, the home’s value may be taken into account after 12 weeks of care.

The 12-Week Property Disregard

When you first move into a care home permanently, the local authority must disregard your property’s value for the first 12 weeks. This gives you time to plan and consider options such as renting out the house or arranging for a deferred payment agreement, rather than selling immediately.

During this 12-week period, you may be eligible for temporary funding, which will need to be repaid later. This short grace period is a valuable opportunity to seek financial advice and consider longer-term arrangements.

Deferred Payment Agreements

A Deferred Payment Agreement (DPA) allows you to delay selling your home by borrowing money from the local authority to pay for your care. The council places a legal charge on your property, and the fees are repaid later when the property is sold, either after your death or if you choose to sell.

This arrangement means you can access care without selling the home straight away. It also gives families more time to consider whether they might want to keep the house in the long term or rent it out to cover some of the costs.

Renting Out the Property

If you do not want to sell your home, another option is to rent it out and use the income to help pay for care. This strategy works best if the rental income is significant enough to make a meaningful contribution to care fees.

Renting also means the house remains in your estate, potentially increasing in value over time, and can be passed on to heirs later. However, it comes with responsibilities such as maintenance, tax implications and the need for someone to manage the tenancy.

Gifting the House or Putting It in Trust

Some people consider giving their house to children or transferring it into a trust to avoid it being included in the means test. However, this approach carries risks. If the local authority believes you have deliberately deprived yourself of assets to avoid care fees, they can still treat you as owning the property. This is known as “deliberate deprivation of assets” and can result in the means test being adjusted as if you still owned the home.

Gifting your property also means losing legal ownership and control, which can lead to complications if relationships change or financial issues arise. Transferring a home into a trust may offer some protection in certain situations, but it must be done well in advance and with specialist legal advice.

Care Fee Annuities and Financial Planning

Another option is to purchase a care fees annuity. This is an insurance product that pays a guaranteed income for life to cover care costs. It requires an upfront payment, but it can provide peace of mind and preserve other assets such as the family home.

Professional financial planning can also help identify ways to structure income and capital in the most effective way. This may include using pensions, investments or downsizing to fund care without fully selling your main residence.

When the House is Protected Automatically

As mentioned, there are some cases where the value of your house is excluded from the care fees assessment. If your partner, former spouse or civil partner still lives in the property, or if a disabled relative or dependent child resides there, the home will not be counted. In such situations, you cannot be forced to sell your home to fund care.

Conclusion

Avoiding the sale of your house to pay for care requires early planning, a solid understanding of the social care funding system and professional advice. While options such as deferred payment agreements, renting the property or using financial products can help preserve your home, attempts to sidestep the system through gifting or transfers must be approached with care to avoid penalties. The key is to seek advice before care is needed, understand your rights and explore all available pathways that support long-term planning and family stability.