How to Avoid Selling Your House to Pay for Care

How to Avoid Selling Your House to Pay for Care

Facing the prospect of needing long term care in later life can be an emotional and financial challenge. For many people in the UK, the biggest concern is whether they will have to sell their home to cover care costs. With residential care home fees often exceeding a thousand pounds per week, it is understandable that homeowners fear losing the family property they worked hard to build and maintain.

The good news is that selling your house is not always inevitable. There are legal protections, funding options and planning strategies that can help you or a loved one avoid having to sell the home in order to pay for care. However, these routes are complex, highly individual and must be approached carefully to ensure they meet eligibility rules and avoid any accusations of deliberate deprivation of assets.

This article explores how the care system in England assesses your finances, what exceptions exist for homeowners, and how to approach future planning if you want to keep your house in the family.

How Care Fees Are Assessed

When someone moves into a care home on a permanent basis, their local authority will carry out a financial assessment to determine who should pay for their care. This means calculating the total value of your assets, which includes savings, income and in most cases, the value of your property.

If your total capital is above the upper threshold, which in England is currently set at one hundred thousand pounds, you will be expected to pay the full cost of your care. If your assets fall below this threshold, the local authority may contribute to the cost, but you may still be asked to contribute from income such as pensions. Below the lower threshold, you may be entitled to maximum support, although this still depends on the type of care and individual needs.

Your home is not always included in the means test. Whether or not it counts as part of your capital depends on your circumstances, including who lives in the property at the time of assessment.

When Your Home Is Excluded from the Means Test

One of the most important protections in the care funding rules is that your home will not be counted in your financial assessment if certain relatives continue to live there. This includes a spouse or civil partner, a close relative aged sixty or over, a dependent child or an adult relative who is disabled or incapacitated. In these cases, the home is disregarded and you will not be forced to sell it to fund care.

Even if no qualifying relative lives in the property, the local authority cannot force a sale during your lifetime. Instead, they may offer a deferred payment agreement, which allows you to delay selling your home by borrowing care fees from the council. The loan is secured against your property and is repaid either when you sell the home or from your estate after death.

These safeguards mean that selling the home is not a requirement in most cases, and there are mechanisms in place to give families time to plan or avoid an immediate sale.

The Deferred Payment Agreement

A deferred payment agreement is available to eligible homeowners who have been assessed as needing care and have limited liquid assets. Under this scheme, the local authority pays the care home fees on your behalf and places a legal charge on your home. Interest is charged on the amount owed, but it allows you to retain ownership and delay selling.

To qualify, you must meet the local authority’s criteria, including having a low level of savings and a property that is not disregarded. The council must be confident that the property provides adequate security and that the arrangement is sustainable over time.

The scheme provides breathing space for families who are not ready or willing to sell the home immediately. It also offers flexibility if the property is expected to increase in value or if family members are hoping to raise funds by other means before making a decision about the future of the home.

Gifting or Transferring the Home

Some people consider transferring ownership of their house to children or placing it in a trust to prevent it from being included in the care fee assessment. While this may seem like a straightforward solution, it is fraught with legal and financial risks. If the local authority believes you have deliberately reduced your assets to avoid paying for care, they can apply the deliberate deprivation of assets rule.

There is no set time limit on how far back the council can look. If they decide the transfer was done with the intention of avoiding care fees, they can still include the value of the home in your means test, even if you no longer legally own it. This can create complications not only for care funding but also for the family members involved, who may be pursued for the value of the asset or see the arrangement challenged in court.

Before making any decision about gifting or restructuring your assets, it is essential to get legal advice from a solicitor who specialises in elderly care planning and estate law.

Using Property as a Rental Asset

If you or your family are keen to keep the home, another option is to rent out the property to generate income. This can be used to contribute towards care costs while allowing the home to remain in the family’s possession. Rental income may be assessed as part of your means test, but it can reduce the need to sell the home and may help cover a significant portion of the fees.

This route requires careful management, including maintaining the property, ensuring compliance with landlord regulations and managing tenants. If successful, it can be a practical compromise between selling and relying entirely on council support. It may also give family members time to plan for future ownership or consider buying the property themselves in the longer term.

Seeking NHS Continuing Healthcare

In some cases, individuals with complex or ongoing health needs may qualify for NHS Continuing Healthcare, which is fully funded by the NHS and does not require any financial contribution from the individual. If granted, it covers the full cost of care, including accommodation, whether in a care home or at home. Importantly, financial means are not assessed and property ownership is not taken into account.

However, this funding is not easy to obtain and is subject to a rigorous assessment based on medical need, not financial situation. If you or your loved one has a primary health need and requires complex care, it is worth pursuing this option with the support of a specialist adviser or advocate.

Planning Ahead with Legal Advice

The best way to avoid selling your house to pay for care is to plan well in advance. This means discussing future care needs early, considering powers of attorney, updating your will and understanding the financial implications of different care arrangements. Consulting a solicitor who specialises in elder law or estate planning can help you explore legitimate and compliant strategies that suit your circumstances.

Proper planning may include financial products such as long term care insurance, annuities or equity release schemes, although these all come with their own risks and conditions. Having a clear, legally sound plan in place can offer peace of mind and ensure that your wishes are respected.

Final Thoughts

While care fees can place a significant financial burden on families, selling your house is not always the only or best solution. With the right planning and support, there are ways to protect your home, secure care funding and make informed decisions that align with your long term goals. Each case is unique, and the path you take will depend on your health, your assets and your family situation. Seeking expert legal and financial advice is the most important step in protecting your home and future wellbeing.