Selling your home before moving into care isn’t that uncommon. Many people do it to fund care, realising they won’t need their property anymore as they’ll no longer be living there. But what if the home is jointly owned and only one person plans on moving into care? Do things become more complicated in this scenario?
That’s the purpose of this guide, which looks at whether a jointly owned home can be sold to pay for care.
Who pays for care?
Eligibility for care funding, whether in a care home or through home care, hinges on several aspects. These include:
- The value of your income
- Savings, property
- Other assets, such as investments and additional properties.
Should your savings exceed the upper threshold in the table below, you won’t be eligible for means-tested council support, which otherwise provides financial assistance to cover the costs.
If, however, your savings fall between the upper and lower thresholds, you’ll be entitled to partial funding from the local authority. And if your savings are under the lower threshold, you can access maximum funding support.
Additionally, self-funders can access support, including benefits like Attendance Allowance.
What is the means test?
By this point, you may have questions about the means test. It’s a thorough financial assessment used to decide if you’re eligible for council-funded care support. The test evaluates everything, including your income, savings, property value and other assets.
People needing care undergo this test to see if they qualify for financial assistance, and to what extent. After taking the test, you’ll have a better idea about whether you’ll receive full, partial or no funding from the council for care services.
How does care work with a jointly owned property?
After moving into care, there are a few different scenarios that can present themselves if you have a jointly-owned property.
Jointly owned property with a partner still living there
The property won’t be factored into the means test if your partner continues to reside in your jointly owned home.
Temporary stay in a care home
Your property is not included in the means test if your stay in a care home is temporary, such as for respite or convalescence, or if you are being assessed for home care.
Cohabitating & not cohabiting jointly owning property
If you are cohabitating but are not civil partners or married, the property will be included in the means test even if you are still cohabiting. However, it’s exempt if your ex-partner is caring for a child under 18, a relative over 60 or a disabled relative living in the same property.
For other jointly owned property where one or more parties no longer lives in the property, the matter can be more complex. The property share of the person who needs care is normally calculated as half the property’s value based on the current equity, unless the ownership is on the basis of tenants in common. Tenants in common ownership means there could be unequal portions of ownership.
For instance, if two parties own a fully paid-off £500,000 house jointly, it means the part-owner that needs care is considered to have £250,000 in assets (half the value) by default. If ownership shares are unequal, such as with tenants in common, assets are calculated based on the specific share that’s owned by the person who needs the care.
Moreover, the local authority must base its valuation on the value of the person’s share under current circumstances, rather than the potential sale value of the property. Given that another owner may continue to live in the property, or simply refuse to sell, it might be challenging to find an external buyer. Consequently, the assessed value of the share owned by the individual who needs care could be calculated as considerably lower than the true market value. So, strategically, it might be in everyone’s best interest if the co-owner refuses to sell, but you should consult a solicitor to see if this applies to you.
One common option that can help with means tested jointly owned property is for one co-owner to buy the property from the other. Usually the one who needs care will sell to the other owners. If it’s a family member that needs care, they might be tempted to sell their share for next to nothing so that they will pass the means test. This strategy can get you into a lot of trouble as you might be deemed to be avoiding care costs deliberately, so you should consult with a legal specialist if you want to explore this avenue.
Can the joint owner still live there?
If the means test excludes your property, your partner can stay there. However, if the property is included in the test, and the co-owner agrees to sell, naturally they would need to relocate.
It’s important to remember that no one can force you or your partner to sell the property.
12-Week disregard period
Upon entering a care home, there’s a 12-week period where your property share isn’t considered for care fees. This provides time to decide on the property’s future, like selling it or renting it out.
Deferred Payment Agreement (DPA)
A DPA, if granted, allows you to postpone using your home’s value for care costs, typically until after your passing, with the local authority recouping the care costs from your home’s sale. The council will effectively be putting a lean on the property. There are administrative and accruing interest costs. Eligibility varies, and this option is at the discretion of the council, so consult your local authority if interested in a DPA.
What if both parties wish to sell the property?
You have several options if you have a jointly owned property and both parties agree to sell it to help fund care.
Selling through an estate agent allows you to reach a broad market. Agents provide valuation, marketing and handle viewings, aiming to get the best possible price. However, this process can be time-consuming and incurs agent fees. You almost certainly won’t get the house sold within the 12-week disregard period.
Selling at auction can be quicker than through an estate agent. It’s ideal for properties that might attract competitive bidding or for those needing a lot of renovation. The sale is legally binding once the hammer falls, but there’s less control over the final sale price and there’s no guarantee that the house will sell if you set a reserve price that’s too high. Auctions are full of bargain hunters.
Property Rescue offers a fast, straightforward and direct sale, often appealing to anyone needing a quick resolution. We buy properties directly from you, in any condition, which can significantly speed up the process compared to traditional methods. This route provides certainty and speed, offering a practical solution if you prioritise time and ease over maximising sale price.
There’s nothing to force you or your partner to sell a jointly owned property in order to pay for care. But it may be included as part of the means test, and a non-sale can result in someone who needs care not getting it. Should you decide to sell, Property Rescue can help with a quick sale for minimum stress and hassle. Get a free, no-obligation quote today.