There are many misunderstandings about whether someone’s home must be sold to pay for care. The rules can be complicated, and the right decision will depend on the person’s circumstances, finances and care arrangements.
This guide provides a general overview of what may happen when someone moves permanently into residential care and their property is included in a financial assessment.
Who Can Make Decisions About the Property?
Where the property owner still has mental capacity, they can decide whether to sell or rent out their home themselves.
Where they no longer have capacity, someone will usually need the correct legal authority to manage the property on their behalf. This may be:
• An attorney appointed under a registered Property and Financial Affairs Lasting Power of Attorney
• An attorney appointed under a valid Enduring Power of Attorney
• A property and financial affairs deputy appointed by the Court of Protection
A registered Property and Financial Affairs LPA can normally give an attorney authority to sell the donor’s home, provided they act in the donor’s best interests. A deputy must check the wording of their court order to confirm what they are authorised to do. A separate court application may be required where a property is jointly owned or the proposed transaction is not covered by the deputyship order.
Professional legal advice should be obtained before selling property for someone who lacks capacity.
What Is the 12-Week Property Disregard?
When someone moves permanently into a care home, the value of their former main home may be left out of their financial assessment for the first 12 weeks.
This is known as the 12-week property disregard. It may apply where the property would otherwise be included in the assessment and the person’s other capital is below the relevant limit. The person may still be expected to contribute towards their care from their income and other assets during this period.
The disregard gives the person and their family time to consider how future care fees will be paid.
You Do Not Have to Sell the Property Within 12 Weeks
A common misunderstanding is that the property must be sold before the 12-week period ends.
This is not the case.
The disregard is intended to provide breathing space while the available options are considered. These may include:
• Selling the property
• Renting it out
• Applying for a deferred payment agreement
• Using other income or capital to meet the fees
• Considering whether returning home with an appropriate care package is possible
From the end of the disregard period, the property may be included as an asset in the person’s financial assessment if no other property disregard applies.
Could the Property Be Permanently Disregarded?
In some circumstances, the value of the property may continue to be excluded from the financial assessment.
For example, a disregard may apply when the property remains the main home of a qualifying relative. The precise conditions differ depending on the person’s circumstances and whether the assessment takes place in England or Wales.
The local authority should explain whether a property disregard applies and what evidence is required.
What Is a Deferred Payment Agreement?
A deferred payment agreement is an arrangement with the local authority that can allow someone to delay paying some of their care-home costs.
The council pays an agreed amount towards the fees and secures the debt against the property, usually by placing a legal charge on it. The amount owed is then repaid later, commonly when the property is sold or after the person dies. Interest and administration charges may apply.
A deferred payment agreement can mean the property does not need to be sold immediately. However, eligibility criteria and terms apply, and each local authority should provide details of its scheme.
Could the Property Be Rented Out?
Some families choose to rent out the property rather than sell it.
Possible advantages include:
• Receiving rental income to contribute towards care fees
• Retaining ownership of the property
• Benefiting if the property increases in value
However, there are also important responsibilities and risks to consider:
• Maintenance and repair costs
• Letting-agent and insurance fees
• Periods without a tenant
• Landlord responsibilities
• Income tax on taxable rental profits
• The effect of rental income on the financial assessment
• An increasing deferred-payment debt if the rent does not cover the care fees
Rental income will normally be considered when calculating what the person can contribute towards their care.
Selling Is Not Always the Only Option
Moving into long-term care does not automatically mean a person’s home must be sold immediately.
The best option will depend on:
• Whether the placement is permanent
• Who lives in the property
• The person’s other income and assets
• The cost of the care
• Whether a deferred payment agreement is available
• The responsibilities and likely income involved in renting
• The person’s wishes and best interests
Get Advice Before Making a Decision
Selling or renting someone’s home is a significant financial and legal decision. Before proceeding, consider speaking to the local authority and obtaining independent legal and financial advice.
Safeguarding Futures can help you understand the care-funding system, the questions to ask and the options that may be available to you.
Need help understanding how a property could affect care fees? Contact Safeguarding Futures to discuss your situation.
This article provides general information rather than legal or financial advice. Care-funding rules and thresholds can differ between England and Wales and may change over time.
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