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Dear Jenny,
My wife and I own our house outright (worth £400,000 approx.) and we also own outright a property (£160,000 approx.) where our daughter, her husband and young child live. If at any time in the future one or both of us should need social care, are there any circumstances in which we would be forced to sell the house where our daughter lives?
Name and address supplied
Jenny says: The cost of care can derail even the best-laid financial plans. On average, a care home in England costs around £35,000 a year, according to consultancy LaingBuisson. If you need nursing care, you could pay much more.
State support is available, but only to those with assets below a certain cap. In England, the “capital limit” for both residential care funding and care at home is £23,250. These limits vary across the UK. [In Scotland, the capital limit for residential care funding is £28,750, while care at home is free to those assessed by their local authority as needing it.]
Whether the value of your home counts towards the threshold depends on the type of care. If you’re receiving care at home, it won’t be included. If you’re going into residential care, the value of your home will be included unless someone else is living there, and that person is your partner, a relative over 60, a relative who is disabled, or a child of yours under 18.
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So, if you needed to go into a care home and your wife was still living in the home you own together, you would qualify for local authority funding if your other assets and savings were worth less than £23,250 (as you live in England). But as you own a second property worth £160,000, you won’t be eligible.
In theory, that could entail the awful decision of having to sell either your own home or the home your daughter lives in. Gifting the property to your daughter might seem like an obvious solution, if you would otherwise qualify for local authority funding. But if care needs were foreseeable, the council could treat this as “deliberate deprivation of assets” and still include the property.
As things stand, there is no limit on the amount you could end up paying for care. An estimated one in seven 65-yearolds faces lifetime costs of more than £100,000. But from October 2023, the Government will introduce an £86,000 cap on the amount anyone living in England will need to spend on personal care over their lifetime.
The threshold for local authority support will also change, meaning more people will be eligible: if you have less than £20,000, you won’t have to contribute anything; if you have between £20,000 and £100,000, you’ll receive some support.
While the 2019 Conservative Party manifesto stated that “nobody needing care should be forced to sell their home to pay for it”, even under the new system, some will still have to sell their home to fund their care.
If you find yourself in this situation, one option is a deferred payment agreement. This allows you to use the value of your home to cover care home fees without having to sell it straight away. Your council will help to pay the bills on your behalf, and you repay them when you sell your home, or after your death. Bear in mind that your council may charge interest (capped by the government at 0.95 per cent in England), as well as admin fees.
If you’re able to receive care at home but are struggling to meet the costs, equity release is an alternative to selling your home.
Jenny Ross is editor of ‘Which? Money’. To have your question featured on this page, email business@inews.co.uk
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