Selling your Home to Pay Care Home Fees

Do I need to sell my home to pay care home fees?
Do I need to sell my home as soon as I move into a care home?
What is deprivation of capital (notional capital)?

Do I need to sell my home to pay care home fees?

When you are assessed as needing residential care, the Local Authority will carry out a Financial Assessment to work out how much you have to pay.  If you have capital assets worth £24,750 or more, including the value of your home, you must meet your own care costs in full (over and above any assessed entitlement to free Personal and Nursing Care).  If you have money to pay for your care home fees other than from selling your home, then you can of course use that.  If not, you may need to sell your home to pay for your care, but there are circumstances in which your house will not be included in the financial assessment.

The law says that the Local Authority must disregard the value of your home when your partner or a relative who is over 60 or incapacitated still lives there.  The Local Authority also has discretion to disregard your home in some other circumstances, for example if someone has given up their own home to care for you.

For more information on selling your home to pay care home fees, see Treatment of Your Home.

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Do I need to sell my home as soon as I move into a care home?

If you don't want to sell your home straight away, your Local Authority can offer you the opportunity to enter into a Deferred Payment Agreement (DPA).  A DPA means that the Local Authority will pay for your care until your house is sold, at which point the Local Authority will recover the amount you owe.  A DPA is a legal contract between the local authority and the home owner and can include provisions covering: the amounts to be deferred; arrangements for insuring and maintaining the property; arrangements for termination of the agreement etc. 

You may be able to rent out your home during the period of the DPA and use the rental income to help you to pay for your care home fees. 

Some Local Authorities use Charging Orders instead of DPA's, and this means that they put an order on your deeds so that they can recover the cost of the care they have paid, when your house is sold.

For more information on DPA, see Deferred Payment.

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What is deprivation of capital (notional capital)?

The Local Authority may consider that you have deprived yourself of a capital asset in order to reduce your liability to pay for your residential accommodation.  There may be more than one reason for disposing of an asset, but if the Local Authority considers that avoiding care home fees was a significant one, they can conclude that you have deprived yourself of capital.  The Local Authority will then calculate the amount you have to pay for your care home place as if you still own that asset. 

There is no time limit on when an asset was transferred.  If you disagree with the Local Authority's decision you can make a Complaint using the Local Authority's complaint process.

Deprivation of Capital may take a number of forms and could include making a lump-sum payment to a relative or friend, incurring substantial expenditure e.g. an expensive holiday, transferring title deeds to a property to someone else, placing money in a trust which cannot be revoked, or following an extravagant lifestyle that you would not normally be able to afford.

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last updated 10/04/2012