Care home fees in the UK are rising, forcing many to sell their family homes to pay for care. This article explains why people are selling their homes, debunks the myth of the seven-year rule, and outlines two practical strategies to protect your home: changing ownership to tenants in common and releasing equity or downsizing. It also warns against common pitfalls like giving away your home or using trusts without proper advice.
Knowing how to protect your family home has never been more important, as care home fees continue to rise, and families often cannot afford these fees without selling their most valuable asset. This article explains why people are being forced to sell their family homes, clarifies common misconceptions, and offers practical strategies to safeguard your home.
Care home fees in the UK are substantial. On average, residential care homes cost around �A35,200 per month, while nursing care homes average �A36,100 per month. These fees cover basic accommodation and care, not luxury facilities. To put it in perspective, the accommodation is comparable to first-year university halls.
The responsibility for paying care home fees depends on your capital, which includes savings, investments, and property. Local authorities conduct a financial assessment to determine this. If you have more than �A323,250 in capital, you are expected to fund your care yourself. According to the Office for National Statistics (ONS), about one-third of people currently fund their own care.
People pay for care by using their savings, selling investments, and often selling their property. This situation has become more pressing since the planned care fees cap, which would have limited personal care costs to �A386,000 over a lifetime starting October 2025, was scrapped. Without this cap, there is no limit to how much one might have to spend, leading many to sell their family homes.
A widespread but mistaken belief is that giving away your home to your children and then living for seven years will protect the home from being counted in the financial assessment. This is not true. There is no seven-year rule for care home fees.
Local authorities can look back indefinitely and may consider such transfers as deliberate deprivation of assets. If they determine this, you will still be required to pay your care fees, potentially losing control of your home prematurely.
Most couples own their home as joint owners, meaning when one partner passes away, the other owns 100% of the property. If one partner goes into care, the home is not counted in their financial assessment, but it is counted fully for the other partner if they later require care.
By changing ownership to tenants in common, each partner owns a defined share of the property, usually 50/50. When the council assesses care fees, only the portion owned by the person entering care is considered. This can help ring-fence the other half of the property for the family.
However, this strategy is not foolproof. Councils may still investigate whether this was done to avoid care fees. Legal advice is essential before making such changes.
Some prefer to stay at home and receive care there. To fund this, releasing equity through a lifetime mortgage is an option. This mortgage is repaid upon death through the sale of the house. While this means the home cannot be kept in the family, it allows the person to remain in familiar surroundings.
Downsizing is another common approach, where retirees move to smaller, more manageable homes. This can free up cash to pay for care or living expenses. Although downsizing could be questioned as deliberate deprivation of assets, it is a common and reasonable choice, especially if done early.
Both options require regulated financial advice, as they can affect inheritance and future means testing.
Some social media advice promotes using trusts, such as asset protection trusts, to safeguard the family home. However, trusts can be problematic:
For most people, trusts are complex and expensive. Proper legal advice is crucial before considering this route.
The key takeaway is to understand your options and plan early. Trying to figure out how to protect the family home at the last minute, just before entering a care home, can lead to costly mistakes.
This article is for educational purposes only and does not constitute legal or financial advice. If you are considering any of these strategies, seek tailored legal and financial advice to ensure the best outcome for your circumstances.
Protecting your family home from care fees requires careful consideration, understanding of the rules, and professional guidance. By being informed and proactive, you can make decisions that safeguard your home and provide peace of mind for you and your family.
