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Why shouldn't you use your home to pay for care?
You may have no option but to use your home to pay for your long-term care but chances are you won't move back home so why worry about selling your home.
by Michelle McGagh on Feb 28, 2013 at 14:10
The idea of selling the family home to pay for care sends a shiver down the spines of many but why shouldn’t the government ask the asset-rich to pay for their old age?
The government is shaking up long-term care, introducing a cap on care fees of £75,000 and extending the means-testing threshold for government help to £123,000.
It has also boldly proclaimed that no-one will be made to sell their home to pay for care thanks to the 'deferred payment scheme'. The argument is that people have worked hard all their lives paying off their mortgages to own their piece of this green and pleasant land so why should they be made to sell their home to pay for the terrifyingly-high cost of old age care?
This policy plays straight into the hands of the babyboomers, who it should be noted are a key voting demographic, by essentially promising to insulate them from the cost of their later life. What doesn’t make sense is the fact that when someone goes into care, it doesn’t matter whether the house is there or not, because once you move into a care home there is a slim to zero chance you’ll come out again.
For those who argue they want to leave their property to their relatives, well the cost of the care has to be paid for whether it is upfront or after death, meaning the house will more than likely have to be sold anyway to cover the bill – unless of course you have a spare £75,000 sitting around.
Of course the benefit of deferring care fees is that it prevents a fire sale of a property at a knock-down price but it doesn’t need to be deferred until after death considering some people spend many years in care.
You’ll have to cough up anyway
Despite the government’s big boast, the fact of the matter is your home will probably have to be sold to pay for your care anyway. Few people have £75,000 in savings to cover the bills and the cap on fees only covers the cost of your actual care, not the ‘hotel costs’ of residential accommodation and food.
And even though the means-testing threshold has been increased from £23,500 to £123,000 it doesn’t mean that those with less than £123,000 in assets get free care. Only those with £17,500 or less receive free care and everyone else with assets up to £123,000 will receive state help with costs on a sliding scale – the richer you are the less help you get until those with over £123,000 of assets receive no help towards the £75,000 cap.
The truth is you’ll have to pay for care; we’ve got a cap that doesn’t cover all care costs and a generous means-test threshold working on a sliding scale.
A better way
If people really want to stay in their homes, surely they should look at modifications and at-home support, maybe even intergenerational living (although granted this may not be an option for some older people with more serious care needs).
The coalition has already said it would relax planning permission rules for a three-year period in order to let people extend their homes, so a ‘granny annexe’ will become a viable option for some families. Although a word of warning, check with your local council on where it stands as the government has said it will allow the local authority to decide whether it will follow the plan and many boroughs have opposed it.
Whichever way you look at it, care is costly and the state can’t afford to cover all the costs. People will have to take more responsibility for themselves.
Young people struggling to get on the property ladder are reminded that owning a property is a privilege not a right, but older generations need to heed the message too; just because a property is your home it doesn’t mean that you shouldn’t be expected to pay your way and dump another costly bill on an already over-burdened generation.
More about this:
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- Government wants tenants in old people’s homes
- IHT freeze will not help pay for long-term care reform, say accountants
- Q&A: how long-term care reforms affect you
- Long-term care: are you paying for it twice?
- Forget the cap, here's the truly frightening cost of long-term care
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