Estate Agents- the facts you should know

If you are moving into residential care there are several facts you should know if you are considering either selling or renting your home in order to pay for your care.  These may affect any benefits or allowances you may be entitled to;

1. What counts as property?
'Property' means any building, accommodation or lands that you own or jointly own. For most people this is their home but it can also include, for example, houses lived in by someone else, holiday homes or commercial property.

2. Will my property be taken into account?
If you own property, other than your former home, your local council will take its value into account from the date you enter a care home. If the value of this property is more than £23,250 you will have to pay the full cost of your fees.

3. What happens if I give my property away?
If you give away property or sell it for less than it's true value to try to avoid paying the full cost of your fees, the council will calculate your charge as if you still own the property. There are special rules the council can apply if they think you have deliberately deprived yourself.

4. What if a relative continues to live in my home?
The council will not take the value of your home into account while it remains the home of any of the following people:
• Your partner or spouse
• A relative aged over 60
• A relative aged under 60 who is incapacitated
• A divorced or estranged partner - if they are a lone parent
• A child under 16 who is maintained by you.

However, they will include its value if any of the above people move into the property with the intention of gaining the disregard for you.
They do have discretion to ignore the property's value if someone not listed above lives there; for example, if that person is your former carer who gave up his or her own home in order to care for you. In other circumstances they will take the value of your home into account after the '12 week property disregard' period. If you own the property jointly, they will take the value of your share into account.

5. What is the '12 week property disregard'?
If they take your home into account the council will ignore its value for the first 12 weeks starting from the date you first became a permanent resident. This is called the '12 week property disregard'. This is to give you time to decide what you are going to do. You will have to contribute towards your care costs during this period from income and other capital. You will also have to continue to maintain the property and meet any ongoing costs that arise. If you have more than £23,250, excluding the value of your former home, you will have to pay the full cost from the date of admission.

6. What happens after the '12 week property disregard'?
After the '12 week property disregard', the will be re-calculated to take the value of your home into account. You will then have to pay the full cost. You will need to have decided how you are going to do this before the disregard period has expired. You will need to take advice at the earliest opportunity to decide how you are going to pay for your care.

7. What options are available to me?
There are a number of options you may want to consider. It is essential that you obtain independent advice before deciding which solution is best for you. Everybody's circumstances are different and we suggest you obtain help in making your decision. Remember, it is important for you to make this decision at the earliest opportunity because you will have to pay the full cost after the property disregard period.

8. What if I do not want to sell my property?
There are various ways to fund your care. Below are some examples:
• You may decide to raise the money you need by renting out your home. The rental income may allow you to fund your care without the need for a loan. Whether you can do this will depend on your income, how much the fees are and whether anyone else can help you. You will need to consider expenses such as the maintenance and insurance of the property
• You may have family or friends who are willing to contribute towards the cost of your care
• You may decide to raise the money by taking out a loan, taking out an annuity, a home income plan or some other type of equity release scheme
• You may decide to apply for the council's deferred payment scheme.
• Before making a decision you should obtain advice about the effect on any benefits you may be claiming.


9. What if I want to sell my home but cannot afford the fees until it is sold?
You may have enough capital and income to pay your fees in full whilst you are waiting for the property to sell. If the property takes longer to sell than expected, or you cannot afford to pay the full fees until it is sold, you can apply for the council's deferred payment scheme.

10. What is the deferred payment scheme?
The deferred payment scheme is designed to help if you cannot afford to pay the full cost of care fees because your capital is tied up in your property. The scheme ensures that people going into a care home who do not want to sell their property in their lifetime, are not forced to do so.
The scheme offers an interest-free loan from the council, using your home as security. You will have to pay towards the cost, based upon your income and other capital. After assessing your finances, the council will pay the difference between what we ask you to pay and the actual cost of the home. The part that the council pays on your behalf is the 'deferred payment'. The deferred payments build up as a debt to the council, which is cleared upon the eventual sale of your home. You do not have to sell your property if you do not want to. If you decide not to sell the property during your lifetime, the money will be repaid to the council from your estate.

11. Will I be eligible for the deferred payment scheme?
Individual councils have discretion as to whether or not to enter into an agreement. There is a limited amount of money available to fund the deferred payment scheme and your application may not be accepted even if you meet the eligibility criteria. To be eligible for the scheme your capital, excluding the value of your home, must be less than £23,250 and your income must be less than the full cost of the fees. The residential/nursing placement must meet your assessed needs. They will need to be satisfied that you have enough equity in your property to cover your stay in the home, equivalent to at least 2 years funding for a residential home and 18 months for a nursing placement. They may not enter into an agreement if the cost of the home you choose is very expensive. The Council must have the first legal charge on the property. If they turn your application down we will explain the reasons why and advise you how to complain if you disagree with the decision.

12. Can I have a deferred payment on a second property?
No – government rules do not allow this. A deferred payment can only be agreed on your former home.

13. Will I pay interest on the deferred payment?
Interest is not payable on the deferred payment as long as it is;
• Repaid immediately upon the sale of the property or
• Within 56 days of your death.


14. Is the deferred payment scheme suitable for me?
Consider things such as;
• How will you continue to pay for the upkeep of the property?' A condition of the scheme is that you must maintain the property and it must be insured at all times. If you have an outstanding mortgage, for example, you will need to consider how you will continue to make the mortgage repayments. There will be no allowance made for your expenses when we assess how much you will have to pay.
• If you decide to rent the property we will include the rent as income when we assess what you must pay. Again, you must be able to maintain the property and we make no allowance for your expenses.
• Is the property jointly owned? If your property is jointly owned, the other joint owner/s will have to give their permission for a legal charge to be placed to allow the council to secure the accruing debt.
• The scheme allows you to borrow money from the council on an interest-free basis and you do not have to decide immediately what to do with your property.
• What effect will there be on any benefits you may be entitled to? Remember, before making your decision, discuss the options with your family and obtain independent financial and/or legal advice.


15. How do I apply for a deferred payment?
You will need to tell your care manager that you want to apply for a deferred payment. You need to let them know before the end of the property disregard period and at the earliest opportunity. Remember, you will have to pay the full cost if you have not made the necessary arrangements beforehand.

16. Does it cost anything to use the deferred payment scheme?
There is no charge at the present time but councils can ask you to meet the cost of land registry searches and other such costs incurred by the council in registering the legal charge. We will tell you about any charges, if there are any, before you enter into an agreement.

For further advice on whether to sell or rent your property contact a local Estate Agent.