Does Your Home Count Towards Care Home Fees?

If you move into a care home permanently, the value of your home can be counted in the council's financial assessment, and that is what decides how much you pay towards your fees. But it is not automatic, and it is not permanent. If your partner still lives there, or a relative aged 60 or over, or a relative under 60 with a disability, the property is usually ignored altogether¹.

Even when the home is counted, you are not expected to sell it the day you arrive. The value of your main home is left out of the assessment for the first 12 weeks after you move in permanently, and after that your council may offer a deferred payment agreement, which covers your fees and is repaid later from the property when it is sold or from your estate when you die³.

The rules are different in Scotland, Wales and Northern Ireland, and the financial assessment for care is different in England, Scotland and Wales⁵. This page sets out when the home counts, when it does not, and what your options are if it does.

When your home is left out of the means test

The starting point is that the means test only looks at the value of your property if you are moving into a care home. Unless you are moving into a care home, the assessment will not take into account the value of your property at all⁷. That single rule answers a lot of the worry people have when a parent starts needing help at home.

Where you are moving into a care home permanently, the home is still disregarded if certain people remain living in it. The list covers your partner, spouse or civil partner; an estranged or divorced partner who is a lone parent; a relative aged 60 or over; a relative under 60 with a disability; and a child under 18⁴. Independent Age puts the same point more simply: if your partner, or a relative over 60 or who has a disability, still lives in the house, the home is not counted².

There is a separate protection while a former home is being sold. The means test includes the value of your house unless your partner, a relative aged 60 or over, or a relative who is sick or disabled lives there, or you are trying to sell your former home, in which case there is relief for up to 6 months⁸.

If you own your home and move into a care home, its value can also affect the amount of means-tested benefits you are able to get, and in some cases you are not able to get any means-tested benefits at all⁹. Certain types of income, such as money from some disability benefits, and certain types of capital are ignored in the means test⁷.

The 12-week property disregard

The 12-week property disregard is the rule that gives you breathing space. The value of your property is usually ignored for the first 12 weeks after you move into a care home³. You will have 12 weeks after beginning a long-term stay in a care home before the council considers the value of your home as part of the overall value of your assets¹⁰.

Two conditions apply. You must be moving permanently into a nursing or care home, and the property must have been your main residence⁴. The disregard is not a discount and it is not a payment: it simply keeps the house out of the sums for those 12 weeks, which is often long enough to decide what to do with it rather than being forced into a quick sale.

The disregard also interacts with top-up fees. A top-up fee is the extra a care home charges above what the council pays for a place that meets your needs. You are allowed to pay your own top-up fee if you have just moved permanently into a care home and are in the 12-week property disregard period¹¹. Age UK describes the same window: self-funded top-up payments are allowed when you first move into a care home and your property is subject to the 12-week disregard¹².

If there is not a cheaper care home available that can meet your care needs, the council will have to increase its contribution to cover the care home fee increase¹¹. The council assesses your care needs and finances first, then gives details of care homes accepting the amount the council will pay¹³.

Deferred payment agreements: paying from your home without selling it straight away

A deferred payment agreement is the main alternative to selling. Your council may offer you one so you do not have to sell immediately². Under the arrangement you receive help with the cost of your care home fees from the council, on the condition that you will pay them back at a later point⁴. In practice the council loans you the money to cover your fees and then reclaims it when the property is eventually sold².

Repayment is normally tied to the property rather than to a date. The council is usually repaid from the value of your property when it is sold⁴, and the agreement can also be repaid from your estate when you die³.

It is not free money, and it is not free of charge. The council can charge an admin fee to set up the agreement, and interest can be charged on the deferred fees³. The level of both is set by the council, so it varies from one area to another. Over a long stay, interest on a growing balance is the main thing to weigh against the alternative of selling early.

There is a comparison to be made here between a deferred payment agreement and equity release, and the two behave differently. Equity release will only help if you receive care in your property, because if you move out to a care home you will need to repay the loan, usually by selling your property¹⁰. A deferred payment agreement is designed for the care home move itself.

If you get care at home funded by the local council, either fully or partially, the local council may start charging you or ask you to pay more¹⁴. If you would prefer the council to arrange care, they must do so as long as you have eligible care needs, though there may be an arrangement fee⁷.

Capital limits: £23,250 and £14,250 in England

In England, the financial assessment for care at home uses two capital limits. If your capital is below £23,250, your local authority contributes to your costs; otherwise, you pay the full cost as set out in the guidance¹⁵. Independent Age sets out the bands in more detail: less than £14,250 means you will not have to use any of your capital to pay for your care, but you will probably have to contribute from your income; more than £23,250 means you may have to pay for all the care you receive; and between £14,250 and £23,250 you are assumed to have £1 per week extra in your income for every £250 in capital between these limits⁶.

For care home fees, the same upper figure appears: capital over £23,250 results in having to pay the full cost of care services¹⁶. Age UK gives the middle band for care home capital as between £14,250 and £23,250¹.

The practical effect is that the home is not the only asset in the calculation. Savings, investments and some income sit alongside it, and the tariff income rule means a modest amount of capital above £14,250 adds a small weekly sum to what you are expected to pay rather than triggering a full charge.

Giving your home away and deliberate deprivation of assets

Transferring a home to children to avoid care fees is the step most likely to backfire. If the council thinks you have given your home away to avoid care fees, it can apply deliberate deprivation of assets rules and treat the property as if it still belongs to you⁴. The same principle runs through the guidance: if the council thinks you gave away savings, income or property to avoid paying care fees, they may still assess you as if you still had the money or property⁷. If the council thinks you have given away your assets to avoid paying for care, they may still count them in the financial assessment⁶.

The test is not simply about timing. The factors looked at include whether you knew you needed care and support, whether you knew you would need to contribute money towards your care fees, and whether avoiding care fees was a significant motivation for giving away your assets¹⁷. A transfer made years before anyone thought about care, for ordinary family reasons, looks very different from one made after a diagnosis.

Scotland, Wales and Northern Ireland: how the rules differ

The financial assessment for care is different in England, Scotland and Wales, and it can be complicated¹⁸. That means the capital limits and the property rules set out above are not a UK-wide set of numbers, and anyone advising a parent in Scotland, Wales or Northern Ireland needs the rules for that nation.

In Scotland and Wales, what you pay towards any aids or adaptations you need will depend on your council's charging policy⁶. Carer's Allowance applies in England, Northern Ireland and Wales, and has been replaced by Carer Support Payment in Scotland¹⁹. For people nearing the end of life, special rules claims work across England, Wales and Northern Ireland, and the payment will not be paid while you are in hospital, but it can be paid if you are in a hospice²⁰.

There are also differences in how disputes are handled. A court claim for money uses one process in England and Wales, and a different process in Scotland and Northern Ireland²¹. If a sale of a home is delayed, the options and the paperwork differ by nation as well²².

If you are elderly and own your home, its value may be taken into account in assessing whether you are eligible for financial help with the costs of residential care²³. That statement is general, and the detail behind it is where the national differences sit.

Renting out the home, and other ways to raise the money

Renting out the property is one route to covering fees without selling. It requires your lender's permission, and some lenders add an extra percentage on to the mortgage interest rate²⁴. That extra cost has to be set against the rent, and a tenancy also means the home is not available to sell quickly if circumstances change.

Equity release is a different product with a specific limit in this situation. It will only help if you receive care in your property, because if you move out to a care home you will need to repay the loan, usually by selling your property¹⁰. For a move into a care home, that makes it a poor fit compared with a deferred payment agreement.

There is also a scheme in Scotland for homeowners in difficulty. Under the Home Owners' Support Fund Mortgage to Rent scheme, your home is sold to a housing association or the local council, and the mortgage and any secured loans are paid off²⁵. The Open Market Shared Equity scheme in Scotland requires you to show that you cannot afford to buy a home that meets your needs without help from the scheme²⁶.

Two smaller points are worth knowing. If you inherit a dwelling, it counts towards dwellings owned by a buyer for the purposes of the Additional Dwelling Supplement in Scotland²⁷. And if you are non-resident and sell a UK home, tax relief requires you to nominate the home as your only or main home when you tell HMRC you have sold it²⁸.

Where to get free help

MoneyHelper offers free, impartial money and pension guidance, backed by government²⁹. Age UK, Independent Age and Which? all publish free guidance on paying for a care home, and the pages cited here are open to anyone.

Carers UK produces nation-specific Looking After Someone guides with a section dedicated to telling you about all the ways to access financial support, free to download or order from the online shop³⁰. Some local authorities offer support to carers free of charge following a carer's assessment, but some will carry out a financial assessment to see whether you will need to pay anything towards any help that is offered to you³¹.

If you are dealing with arrears on a mortgage or rent while sorting out care, there is free advice on rent arrears and on mortgage interest support³². A care needs assessment is usually the first formal step, and it is free to ask for one.