Factsheet: Going into residential or nursing care when you own a property
Summary
April 2025 (FS30)
This factsheet provides some options if you own property and its value is included in your financial assessment.
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Introduction
Deciding to pay for your care costs using capital held in your property is a big decision. Discuss your options with a friend or relative first and ideally an independent legal and financial adviser. They can support you to make the best decision for meeting care costs.
Society of Later Life Advisers (SOLLA) can help you to find independent financial advice. They offer an accreditation scheme for financial advisers. You can find an adviser through their website societyoflaterlifeadvisers.co.uk or phone 0333 2020 454.
The 12-week property disregard
The value of your property is not included in your financial assessment for the first 12 weeks that you live in a care home. This is called the ‘12-week property disregard’. It will apply if:
- you will live in a care home on a permanent basis
- you have not already paid the care home fees privately, and
- you lived in the property as your main home directly before you entered residential or nursing care
- your savings and assets (capital) excluding the property you lived in is below £23,250
The 12-week disregard does not apply if you own a property but:
- you were permanently renting before moving into residential or nursing care
- you were living in a relative’s house before moving into residential or nursing care
This 12-week disregard gives you the opportunity to consider how to use your property to pay for your care. There are several options:
- A deferred payment agreement or another loan that takes into account the value in the property.
- Selling the property.
- Renting out the property.
If you qualify for the 12-week property disregard, we will complete a financial assessment to work out how much you will pay towards your care costs. This is called your ‘client contribution’. It is based on your income and capital. It does not include the value of the property you were living in.
During the 12-week period we will work with a care provider to make sure your care needs are met. You will need to pay your ‘client contribution’ and we will pay the difference.
The council pays a set amount for residential and nursing care. These are our ‘published rates’.
If the care home that you choose is more expensive, you or another person may need to pay the difference between their rate and our published rate. This is called a ‘top-up’ payment.
When the 12-week period ends
After the 12-week period:
- We will take the value of your property into account when we work out how much you should pay.
- The equity in your property will usually be over £23,250. This means you will need to pay the full cost of your care
- Our contract with the care provider will end. You must agree with them how you will pay for your care once this 12-week period ends. You must make your own arrangements to pay them.
The deferred payment agreement (DPA) scheme
Under the Care Act 2014, all local authorities run a Deferred Payment Agreement (DPA) scheme. This is a loan to pay for care home costs which is secured against your property.
It means you do not need to sell your property to pay for your care in your lifetime. Instead, you can defer paying the full cost of your care until a later date.
Under the Care Act, we must offer a DPA if:
- you can provide adequate security for the debt. This is usually a legal charge on the property
- you are a resident in the local authority area
- your care and support needs will be met by living in a care home
- you have £23,250 or less in capital (such as savings and other assets). This excludes the value of your main or only home
- your home is not disregarded (excluded) from the financial assessment
We offer the DPA to everyone who has a property that is being included in their financial assessment. Sometimes, we can give a DPA to somebody who does not fit the above criteria. Requests are considered on a case-by-case basis.
We can refuse a request for a DPA if:
- we cannot secure a charge on the property
- a top-up payment is needed because the care provider will not accept our published rates
- a person does not agree to the terms and conditions of the agreement
We can also offer the DPA to people in supported living accommodation who intend to sell their property. We only need to enter into a DPA to cover the costs of care and support.
How it works
You can apply for a DPA if you plan to sell, keep or rent your property and meet the above criteria.
How much can be deferred?
Usually, we will pay up to our published rates. You will still need to pay your client contribution using your income and any capital outside of the property that you were living in. This is called a ‘deferred contribution’.
In exceptional circumstances, such as a life-limiting illness, we may consider loaning more. If we cannot, you will need to consider how to pay for your care. An independent financial adviser can advise you on other options.
If you want to go into a care home that costs more than the amount we have agreed to pay, a member of your family can pay a ‘top-up’.
When applying for the DPA, you must check that your care provider will accept our published rates and let us know on the application form. This will avoid delays and make sure we give you the right information and advice.
If your care provider will not accept our published rates, you will have to pay privately. We will be unable to provide ongoing financial help.
The most we can lend you is the value of your share of your property:
- minus 10% for selling costs
- minus the nationally set lower capital threshold of £14,250.
Repayment of the loan
The regulations for loans are set by government. Debts you incur as part of a DPA must be repaid and cannot be written off.
If the loan ends due to the property being sold, the debt must be paid immediately.
If the loan ends because you die, your estate will have 90 days to pay the deferred contribution. After 90 days, we will begin our debt recovery process. If the debt is not paid in full within 90 days, additional interest could be added.
Interest on the loan
Interest is applied from the start of the loan and payable until the deferred amount is paid in full. It is reviewed on 1 January and 1 July each year. It is based on the market gilt rate + 0.15%. So, if the gilt rate is 1%, the interest on the DPA is 1.15% (1+0.15).
Interest is compounded, meaning it is added to the loan and interest is continuously charged on the increasing amount.
Additional costs associated with the loan
We do not make money on this scheme. We only charge the costs for setting up and administrating the loan.
You will need to pay:
- a set up cost to cover administration of your application, and registering the legal charge
- any property valuations completed in the application process or during the loan period
- an annual administration fee (invoiced or added to the loan every six months)
- a redemption fee at the end of the agreement
- any costs outside of our charges, like solicitors’ fees
- a contribution to the cost of your care, determined by financial assessment
Solely owned property
If you are the sole owner, we can use a market valuation or an online valuation. If we agree with the valuation figure, a formal valuation is not needed.
A formal valuation is usually needed at the application stage if:
- the property is of non-standard construction
- there is commercial or agricultural use of the property
- the property is in significant disrepair or suffering defects
- the valuation provided is not agreed by both us and the property owner
Applicants can request an independent valuation but will be invoiced for this.
Formal valuations are also required when the amount loaned reaches 50% and 70% of the equity in the property. The applicant will be invoiced.
Jointly owned property
We only include the value of your share of the property. We will use an independent professional to determine the value. You will need to pay for this.
Usually a desktop valuation will be completed, unless the property is non-standard or is not being maintained. You will be charged an hourly rate for this. We will aim to let you know and give you a cost before it takes place.
If you jointly own a property with another person, the co-owner must also sign the deferred payment agreement and the legal charge. This allows us to register a charge against the property as security for the loan.
If a co-owner is not willing or able to sign the agreement, the DPA cannot go ahead. You will need to consider other options.
The charge will be against the whole property, but we only loan up to the value of your share, minus the equity limit.
Before you apply for a DPA
Before applying for a DPA, you should carefully consider the following points.
- We will place a legal charge on your property. This means we will have the right to claim back the amount loaned when the property is sold or transferred.
- If we need to arrange a formal valuation, you will need to pay for this (straightaway or by having the cost added to the loan).
- If you apply for a DPA and it does not go ahead, you or your estate will be charged the full cost of all work that has been completed.
- As part of the agreement, you will need to tell us who will deal with your estate in the event of your death.
You also need to think about how your property will be looked after while you are not living in it. You need to consider:
- how to maintain it
- how you’ll pay for building and contents insurance
- how you’ll pay for heating to prevent damage from damp and frost
- how to keep it secure
Applying for a DPA
You or your legal representative can apply for a DPA. If we agree, you should get independent financial advice before making the final arrangements.
We will let you know if you need to tell the Department for Work and Pensions (DWP) about any benefit entitlements or changes. Not selling your property may impact your means-tested benefit entitlement, like Pension Credit or Employment and Support Allowance. You may still qualify for Attendance Allowance and the daily living element of Personal Independence Payment (PIP).
Who can apply?
To set up and agree a DPA you will need to complete our application form and provide original or certified copies of the documents requested.
If the person in receipt of care has capacity to manage their finances, they must sign the application and DPA agreement.
If they do not have mental capacity, a deputy or attorney can apply on their behalf. If no such person exists and the person lacks capacity to manage their finances, somebody will need to apply for the legal authority to do this on their behalf.
More information can be found at
Deputies: make decisions for someone who lacks capacity | GOV.UK
Please note:
The council cannot release any financial help until:
- the Deferred Payments Agreement has been completed
- the ID1 form that Legal Services send has been fully completed and returned.
- a legal charge in favour of East Sussex County Council has been registered against the property. This is security for the care charges the Council will loan for the benefit of the person receiving care.
The Deferred Payments Agreement and legal charge will need to be signed by the person receiving care, or by their representative in their capacity as attorney or deputy and by all co-owners of the property.
All persons signing the legal charge will also need to return a completed ID1 form.
This is a requirement of HM Land Registry and means your identity must be verified by a conveyancer, a Chartered Legal Executive, or by personally attending one of the Land Registry’s customer information centres.
Details of what evidence is needed is shown in Appendix 1.
Allowances and maintenance of your property
The Care Act states we should leave you with a weekly ‘disposable income allowance’ of £144. This amount also includes the standard weekly Personal Expenses Allowance of £30.65 to meet your personal needs while you are in long-term care. The remainder is to make sure you have enough money to maintain your property.
You can choose to use some of your £144 per week to pay back some of the money we have loaned. Doing this helps reduce the level of debt accruing.
You will need to show us annual buildings insurance documents for your property and tell us how you will maintain it. We will need this information every year of the loan.
Renting out your property while you’re in long-term care
You may wish to rent out your property while you are in long-term care to reduce your deferred debts. You should discuss this with family and friends and ideally an independent financial adviser. If you do rent it, you must:
- let us know and updated us with any changes
- only rent the property on a 6-monthly tenancy
- have an agreement in place for what will happen if the property is occupied at the time the loan is due to be repaid
We will include 90% of the rental income when we calculate the contribution you will make from your income.
Your options if you go into an extra care housing scheme or supported accommodation
Under the Care Act, we can offer the DPA to people moving to supported accommodation, extra care housing or a care suite. This is because people may need short-term support to pay for their care fees while their property is sold.
We will offer this if:
- you live in the local authority area
- you need to move to supported accommodation, extra care housing or a care suite
- you have £23,250 or less in assets outside of your property (for example in savings or assets)
- your property is not disregarded (excluded from the financial assessment) and the property is actively being marketed for sale
- you are actively selling your former home
We do not apply a 12-week disregard period if you are moving to extra care housing or supported accommodation. This means that depending which comes first, the DPA would start either:
- from the date you move into the care setting; or
- the point when you reach the upper capital threshold of £23,250
In your financial assessment, we will make allowances for your living costs as part of the ‘minimum income guarantee’. This is set nationally. The amount varies depending on your circumstances.
You will not receive an additional allowance while you are selling the property. Any contractual or upkeep costs, such as service charges or a mortgage whilst you are selling the property, will be included in your financial assessment.
Other options
If you decide a DPA is not for you, then you can contact Society of Later Life Advisers (SOLLA). This not-for-profit organisation was set up to help people with later life financial matters.
SOLLA
Phone: 0333 2020 454
Website: societyoflaterlifeadvisers.co.uk
Ask your care provider if they can hold the care fees until the sale of your property.
We can give you a list of providers who could help you with property maintenance and rental opportunities for your property.
How to get more information
Our Finance and Benefits Assessment team can answer questions or provide application forms.
Phone: 01323 464 699
Email: fab@eastsussex.gov.uk
Appendix 1
You will need to take evidence of your identity with you so they can inspect either:
One of the following (List A):
- current valid full passport – state the country of issue and number of the passport
- current United Kingdom, EU, Isle of Man, Channel Islands photocard driving licence (not a provisional licence) – state the number of the licence
- current Biometric Residence Permit issued by the UK Home Office to a non-UK national resident in the UK – state the number of the permit
Or
Two of the following (List B) but no more than one of each type:
credit card bearing the Mastercard or Visa logo, an American Express or Diners Club card. Or a debit or multi-function card bearing the Maestro or Visa logo which was issued in the United Kingdom and is supported by an original account statement less than three months old*
- utility bill less than three months old*
- council tax bill for the current year
- council rent book showing the rent paid for the last three months
- mortgage statement for the mortgage accounting year just ended*
- current firearm or shotgun certificate
* These must be postal statements. They must not be statements sent electronically.
You will also need to take two identical passport-size photographs which are less than three months old.
The conveyancer, Chartered Legal Executive, HM Land Registry officer or other approved verifier will complete section B of the form.
Conveyancers and Chartered Legal Executives may charge a fee to verify your identity.
