For many homeowners in the UK, one of the greatest worries later in life is the possibility of having to sell their home to fund care costs. With care home fees often exceeding £800 per week, it’s understandable that people want to protect their property and preserve it for their family. The reality is that while some individuals do need to use their home’s value to cover care fees, there are several lawful ways to reduce that risk. Understanding how the care funding system works, what exemptions apply, and how to plan your finances early can make a significant difference.

How Care Home Fees Are Calculated in the UK

When a person needs long-term residential care, their local authority conducts a financial assessment, often referred to as a means test. This determines who pays for the care and how much support, if any, the council will provide. The assessment looks at both income and capital, including savings, investments, and sometimes the value of the person’s home.

In England, if you have more than £23,250 in savings and assets (excluding certain exemptions), you are expected to pay for your own care in full. If your assets fall below that threshold, the local authority contributes towards the cost. Once your assets drop below £14,250, the local authority covers the full cost, although most of your income, such as pensions, will still be taken into account.

Your home is only included in the means test if you are moving into permanent residential care and no longer live in it. If you receive care at home or your spouse, civil partner, or another qualifying dependent still lives in the property, its value is disregarded.

When Your Home Is Not Counted in the Means Test

There are several key circumstances in which your home will not be included in the local authority’s financial assessment. The most common exemption applies if your spouse or partner continues to live there. The same applies if a close relative over 60, a dependent child under 18, or a disabled relative resides in the home.

Another important exemption is for temporary care stays. If you enter a care home for a short-term or respite stay, your home will not be taken into account, as you are expected to return.

Additionally, local authorities apply what’s called a “12-week property disregard.” This means that for the first 12 weeks after you move permanently into a care home, the value of your property is ignored while the council assesses your longer-term arrangements. This period allows time to explore funding options without the immediate pressure of selling your home.

Deferred Payment Agreements

If your home is included in the means test but you don’t want to sell it immediately, you may be able to arrange a Deferred Payment Agreement (DPA) with your local council. This is one of the most common ways to avoid selling your house during your lifetime to pay for care.

Under a DPA, the council pays your care home fees on your behalf and places a legal charge on your property, similar to a mortgage. The amount owed is repaid later, usually when the house is eventually sold or from your estate after death. Interest and administration fees may apply, but this arrangement gives you peace of mind and allows you to remain in control of your property during your lifetime.

DPAs are available only if you have less than £23,250 in savings (excluding your home), and the property provides sufficient security for the loan. They’re a practical compromise for many homeowners who want to delay selling but still need to fund care.

Continuing Healthcare Funding (NHS CHC)

In some cases, the NHS may cover the full cost of care under the Continuing Healthcare (CHC) scheme. This funding is based on health needs rather than financial circumstances, meaning that if your care is primarily required due to medical reasons, you may not need to pay anything, regardless of your assets.

To qualify, you must undergo an assessment by NHS professionals, who evaluate whether your needs are primarily medical. This process can be complex, and many people are initially turned down, but successful applicants can receive fully funded care, including accommodation, nursing, and personal support.

It’s important to note that NHS Continuing Healthcare is distinct from standard NHS care, which covers treatment in hospitals or community settings. CHC applies to long-term care, either at home or in a care facility, when medical needs are significant and ongoing.

Care at Home: An Alternative to Residential Care

Receiving care in your own home is another way to avoid selling your property. Home care packages, sometimes called “domiciliary care,” allow you to remain in familiar surroundings while receiving professional support for daily tasks, medication, and mobility.

If you receive care at home, the value of your property is not counted in the financial assessment, because you are still living there. This can make a significant difference in preserving your estate. Depending on your income and savings, the local authority may help fund part or all of your home care costs.

For those with complex medical needs, NHS Continuing Healthcare can sometimes fund care at home, providing a further safeguard against using your home’s equity.

Gifting Your Property: Risks and Legal Considerations

Some people consider transferring ownership of their home to children or relatives to avoid it being used for care costs. While this may sound appealing, it’s a strategy that carries serious legal risks. Local authorities have clear rules against what’s known as “deliberate deprivation of assets.”

If the council believes you transferred your property specifically to avoid paying for care, it can treat you as though you still own it. This means you would still be expected to pay care fees based on the property’s value, even though your name is no longer on the deeds.

There’s no specific time limit on how far back councils can investigate such transfers. Even gifts made several years before needing care can be scrutinised if there’s evidence of intent to avoid charges. It’s crucial to seek legal advice before making any property transfers or trust arrangements.

Trusts and Estate Planning Options

Setting up a trust can be an effective way to manage your assets for the future, but it must be done correctly and for genuine reasons beyond avoiding care costs. For example, a life interest trust or a family protection trust can allow your property to be managed on behalf of beneficiaries, while still providing you with rights to live in it.

Trusts can help ensure continuity and protect assets from probate delays, but they are complex legal instruments. If the primary reason for establishing the trust is to avoid paying for care, the local authority may disregard it. A solicitor specialising in elder law or estate planning can advise whether a trust structure is appropriate for your situation.

Joint Ownership and Tenancy Arrangements

If you own your home jointly with a spouse or partner, how your ownership is structured affects what happens if one of you requires care. There are two main types of joint ownership: joint tenancy and tenants in common.

Under a joint tenancy, both parties own the whole property equally. If one person dies, their share automatically passes to the other. Under a tenants-in-common arrangement, each person owns a defined share, which can be passed separately through a will.

Switching to tenants in common allows you to leave your share of the property to someone else, such as your children, rather than having it automatically pass to your partner. This can help protect part of the home’s value from being used for care costs if one partner needs residential care in the future.

Using Equity Release as a Care Funding Solution

For homeowners who wish to stay in their property but need help covering care costs, equity release can provide a solution. Lifetime mortgages and home reversion plans allow you to access part of your property’s value while continuing to live there.

The money released can be used to pay for home care or adapt the property to make it more suitable for ageing in place. Because the property remains your home, it won’t be counted as capital in a residential care means test. However, it’s vital to seek independent financial advice, as releasing equity can affect inheritance and future financial flexibility.

Regional Variations Across the UK

While the basic principles of care funding are similar across the UK, there are regional differences. In Scotland, for example, personal and nursing care for those over 65 is free, regardless of income, though accommodation costs may still apply. Wales and Northern Ireland also have variations in funding thresholds and local authority practices.

Understanding your region’s specific rules is essential, as thresholds and allowances can differ slightly. Your local council’s adult social care department can provide detailed information about how care costs are assessed in your area.

Early Planning and Professional Advice

The best way to protect your home and assets from being used to pay for care is through early planning. Discussing options with a solicitor who specialises in elderly care law, estate planning, or wills and probate is invaluable. They can help you understand which strategies are legally sound and which might be considered deprivation of assets.

Financial advisers can also help you explore legitimate care funding solutions, such as annuities, savings structures, or insurance products designed to cover future care costs without touching your property.

Conclusion

Selling your house to pay for care is not inevitable. With the right planning, understanding, and professional advice, many homeowners can protect their property while ensuring they receive the support they need. Key strategies include applying for NHS Continuing Healthcare where eligible, arranging care at home, using deferred payment agreements, and structuring ownership wisely.

However, any steps taken must comply with UK law, and attempts to deliberately hide or transfer assets can backfire. The safest approach is to plan early, seek expert legal and financial guidance, and explore all available care funding options. Doing so allows you to maintain control over your home and finances, safeguarding both your wellbeing and your family’s future.