15 - 23 Hagley Road
by James Rousell
The fear of having to sell your home to fund the cost of future nursing or residential care remains a major concern for many people in spite of the Government proposed changes. A recent report by the Local Government Information Unit indicates that a quarter of pensioners who end up in nursing care will lose their home and almost all of their savings. It is estimated that there are more than 400,000 people in 18,000 nursing/residential care homes in the UK and three-quarters of these are privately owned.
The current statistics show that the average cost of nursing/residential care in the U.K. is approximately £27,000 per annum. Those who are self-funding typically spend about four years in care with 12% of those staying in care for eight years or more. It is also estimated that up to 40,000 people every year have to sell their home to pay for the costs of care.
Under the current system, if an individual has more than £23,250 in assets (including the value of their house in which they live) then they will, generally, be expected to pay for the costs of their care themselves and in many cases will be expected to sell their home to fund this care. The local authority will only contribute to the costs of care if an individual’s capital falls below £23,250 in value and will only fund all of the costs of that care, if the value of an individual’s estate falls below £14,250. There are some exemptions that may apply and in some exceptional circumstances an individual’s nursing care costs may be funded by the NHS.
The proposed new system for paying for nursing and residential including new financial assessment procedures are due to be introduced in 2016/2017 – although the “Care Bill” is yet to be finalised by Parliament. The aim of the new legislation, amongst other things, is to introduce a cap on care costs and provide some financial protection for those with modest wealth.
The main changes include a cap of £72,000 cap on the amount anyone should pay for care in their lifetime and new rules on who qualifies for state support in that the capital threshold will increase from £23,250 to £118,000. This means that anyone with capital less that £118,000 should qualify for some State support.
Caution – how effective will these changes really be?
Whilst, on the surface, the new rules look favourable, it is important to understand that :
1. The cap of £72,000 will only apply to the care element of the nursing/residential care fees and will not cover “hotel” costs such as accommodation, board, lodging & food. These costs can be substantial and will not be included in the cap on care fees. It is therefore questionable how useful this cap will be to the majority of people – as an individual would have to be in care for several years before the cap is likely to be exceeded.
2. With the increased capital threshold of £118,000, individuals will still have to make a fairly sizeable contribution to the costs of their care even if there capital is under £118,000. This will be on a sliding scale but the State will only fully fund the costs of nursing or residential care when an individual`s capital falls below £14,250.
This means that many people will still be liable to pay the costs of their own care and may be expected to sell their home to cover these costs.
The good news is that there are various options available to safeguard some or all of your property should you require nursing or residential care in the future. These options may not be suitable for everybody but it is worth taking some professional legal advice. By implementing some fairly basic planning, it may be possible to ensure that the value of your house or home is preserved for your children or grandchildren.
If you would like any further advice, please contact James Rousell on email@example.com or call 01384 371622.