This page was last updated on 1 November 2020.
Care home costs
This article answers some of the most frequently asked questions about care home prices.
It tells you about the average cost of care homes in the UK, gives you advice about the different funding options, and explains whether you have the capacity to protect your home from being sold when going into care.
Topics that you will find covered on this page
Who pays for care home costs?
Most people are responsible for paying for the full cost of their social care.
You will be considered responsible for paying for care home fees if the valuation of your personal assets exceeds the national threshold. The savings threshold is different in England and Northern Ireland than it is in Wales or Scotland.
If your assets are over the threshold, you will be classed as a self-funder and will need to pay your care home charges in full.
However, even if your savings and income are over the threshold and you are self-funding, you may be able to receive other forms of financial help towards your care home fees. For example, you may be eligible for Attendance Allowance, Personal Independence Payment, or Carer’s Allowance if you have a carer.
You should speak to a specialist adviser to receive more personalised advice. They will discuss your funding options when it comes to paying care homes fees and help you budget properly.
How much savings can you have before you have to pay for care?
In England and Northern Ireland, the savings threshold for care home fees is £23,250.
In Wales, the care home costs threshold amount is £24,000.
Finally, the savings threshold for the cost of care homes in Scotland is £27,250.
How much will local authority pay for care home?
In order to determine how much financial support you are eligible for, the local council will arrange for you to undergo a financial assessment or means test.
The areas they will look at during the means test include your savings, income, any other financial capital including investments. If you are moving into a residential care home, the value of your house will also be included in the financial assessment.
After the council has received an estimate of your capital from the assessment, you will be deemed either eligible or ineligible for authority funding. You can find out more about the means test here.
In some cases, your local council may be prepared to pay for your care home place, but not necessarily the full cost of your preferred care home.
If this is the case, a third party such as a friend or family member may wish to contribute towards the rest of the cost of care home fees to help you.
This is known as a third-party top-up fee. Their contribution would be made to cover the differences between what the council is offering to pay and your total care costs.
How much does a care home cost?
The average care home fees in the UK in 2019 was £33,852 per year. For nursing home costs UK fees rose to £47,320 each year.
The exact amount you need to spend on care fees depends on:
- Your care needs and the level of support you require. For example, nursing care prices are higher than for standard care home.
- The quality of the residential care home that you are using. Higher quality care homes tend to be more expensive, but have more comfortable surroundings and nicer meals.
- Whereabouts you live in the UK.
Care home costs per week vary considerably between regions. For example, research showed that the care costs in London had a weighted average of £741 per week, while residential care fees were only £511 a week in the North West of England.
For more advice on how fees vary across regions, you can use this calculator.
Is there a care home fees cap?
There is currently no cap for the costs of residential care in the UK.
However, if you are self-funding and the value of your assets and capital begins to run below the £23,250 savings threshold, you can request a new assessment from the local council.
So, if you expect that your finances will fall bellow the threshold within the next few months, then you should get in touch with the local authority.
The local authority should organise a means test for you quickly so that you don’t end up spending more money than you need to.
Do you have to pay for a care home if you have dementia?
Paying for a care home in the UK can be more expensive if you have dementia.
This is because the dementia care you need is more specialised. There also needs to be a higher staff to resident ratio for this type of care.
However, you will not need to pay for your care home if you are found to be eligible for NHS Continuing Healthcare Funding.
NHS Continuing Healthcare
To work out whether you are eligible, you will need to receive a needs assessment from a team of healthcare professionals. This needs assessment will look at the complexity and intensity of your personal care needs, as well as the danger you might be in if your care needs aren’t properly met.
Whether or not you are given NHS funding will ultimately depend on your individual health needs and if you are being transferred to a care home directly after a stay in hospital.
Therefore, your entitlement to financial support does not depend on any particular condition, disability, or diagnosis. So, if you are diagnosed with dementia, you will not automatically receive NHS funding, but you may be eligible.
UK Long-Term Care Insurance
Another option for dementia care home funding is long-term care insurance. These packages are starting to be offered by insurance providers more and more commonly in the UK.
These insurance packages will typically pay out a £20,000 or £30,000 pot of money if you are found to fail two or more activities of daily living. These daily activities include:
It is possible to insure yourself against diseases that particularly affect older people, such as Parkinsons and dementia. If you later develop these conditions, the insurance will cover the care costs.
Your insurance premium will depend on a range of factors, such as your age, current state of wellbeing, the provider you choose, and the amount you would like to be insured for.
However, since the average cost of a care home in the UK is typically more than £30,000 per year, long-term care insurance is better suited to paying for home care support rather than care home payments or nursing home fees.
Your insurance will normally cover the cost of necessary home adaptations and for daily assistance from local home care services.
A specialist financial adviser can give you more advice on self-funding and alternative payment options, such as equity release or a pension drawdown.
Can I avoid paying fees for care home in UK?
If you try to decrease the total valuation of your wealth so that you don’t have to self-fund the care you need, the local authority will consider this to be self-deprivation.
Deprivation of assets is when you deliberately give away property or money so that your local council doesn’t require you to pay for your care home place.
How does the council decide?
There is no limit to how far back the local council can look to work our whether any self-depriving behavior has taken place. However, there are two main factors that will impact the local council’s conclusion:
- You need to have known that you would soon be paying care fees at the time.
- Avoiding care home fees or nursing care fees was a motivating factor in reducing how much money you have
If the council concludes that you intentionally reduced your income, property or savings, then they might calculate how much you need to pay towards the cost of your care home as if you still had the money you spent or gave away.
What counts as deprivation?
There are multiple actions that can be classed as a way of intentionally reducing your money:
- Making a gift of a large lump sum of money to a loved one
- Making lots of small or expensive purchases in an uncharacteristic way
- Transferring your property deeds to another member of your family
- Gambling away your financial resources
- Buying possessions that are normally not included in a means test, such as jewellery or cars
How to avoid selling your house to pay for care?
If you don’t want to be forced to sell your home in order to pay for the cost of home care, there are some alternatives you might want to consider. For example, equity release and deferred payment schemes.
Can you put your house in a trust to avoid care home fees?
Something else older people needing to cover care costs may be considering is putting their home into a trust. If you put your house into a trust, you can assign ownership of your property to somebody else such as your children.
This is a tricky area. Here is a video from UK Care Guide that explains more about the topic of avoiding care home fees.
However, it is important to know that doing so in order to avoid paying the care fees that you owe will be classed as depriving. You must have other legitimate reasons for using trust services, and you need to assign a proportion of the property ownership to your family member while in good health.
If the council suspect that you knew at the time of using a trust that you would soon have to pay the cost of nursing care or care home services, then you will not gain any benefit and will actually be negatively impacted by making this gift.
Make sure to contact to a professional specialist for financial advice about ways you can pay for care home services or nursing home fees UK before attempting to put your house into a trust or release equity from your home.
Local government has been cracking down on those using trusts to gift their property to their family and avoid fees.
Can I protect my home from care costs?
Equity release schemes allow you to access some of the value of your home without having to sell it.
Lifetime mortgages are one of the main types of equity release schemes and, since they do not require you to sell your home, they can be a good option for older people needing to fund home care or residential care.
Like a deferred payment scheme, a lifetime mortgage is a loan that is secured against your home. This loan can either take the form of a cash lump-sum, or a series of smaller withdrawals. The way you unlock your money depends on the type of lifetime mortgage product that you select.
You will not be required to make any monthly interest payments unless you choose to do so by taking out a flexible plan. Instead, the rate is fixed for life and varies between providers.
The loan and all the interest which has rolled up will be paid off after your death when the house is sold.
To qualify for a lifetime mortgage, you must own a property in the UK valued at £70,000 or more. You must not have any other debts or mortgages secured against your home, or you must use the money you release upon completion to pay off the debt.
All equity release schemes carry certain risks and may impact your tax position and entitlement to state benefits. Therefore, it is important for you to speak to specialist financial advisers in order to make an informed choice about whether equity releasing services are right for you.
What is a deferred payment scheme?
A deferred payment agreement is a loan provided by your local council to help towards the cost of care. These loans usually have fixed rates and are secured against your home.
It allows you to keep ownership of your home and delay paying the bills for your room in a care home until after your death.
Even if a means test finds that you do not qualify for financial support from your local council, you may still be eligible for a deferred payment scheme.
You will only be able to use a deferred payment scheme if you plan on living in a care home and you own property or other capital that the local council can use as security.
You will have to sign an agreement with the local council promising to repay the loan, the interest, and any administration charges involved in the sale of your home upon death.
It is also worth knowing that you can usually rent out your property in addition to using a deferred payment scheme when paying for care homes.
More information related to paying for care
Paying For Care
If you feel that you need extra support around the house, or that you need to move into a residential care home, then you may be worried about how you are going to pay for care. Unfortunately, social care is not cheap. While the exact cost of your care will depend on your personal care needs, care fees can easily run in excess of £100,000.
Care Home Costs
Most people are responsible for paying for the full cost of their social care. You will be considered responsible for paying for care home fees if the valuation of your personal assets exceeds the national threshold. The savings threshold is different in England and Northern Ireland than it is in Wales or Scotland. Therefore, the are costs can also differ.
Home Care Costs
If you are thinking about receiving care and support at home, then you may be worried about how much your home care is going to cost. While it is true that the cost of home care is generally far less than the cost of residential care, home care can still amount to a considerable sum. Indeed, it is very common for the cost of in home care to run in excess of £13,000 per year.
Avoiding Care Home Fees
It may come as surprising news to learn that many people are responsible for paying their full care home costs. A person is responsible for funding their own care if the valuation of their personal assets exceeds the national threshold.
Immediate Needs Care Annuity
An immediate care annuity is an option that can give you peace of mind. Essentially, it is an insurance policy that covers your care fees for the rest of your life by providing you with a guaranteed lifetime income.
NHS CHC stands for NHS continuing healthcare, with continuing meaning long term life care. Health and social care can be expensive, especially if you have no savings, income, or other finances.