While the cost of living only seems to go up, there’s also a new worry on the horizon for many: the potential need to sell their family home to cover care costs in later life. Recent research suggests that the typical £300k home could fund a care home stay for about seven years, but with care costs rising sharply, the question of how to pay for care is becoming increasingly pressing for homeowners across England.
Skyrocketing Care Costs vs. House Price Gains
The price of care in residential homes has surged by approximately 20% to a staggering £816 per week, or around £42,400 annually, since the 2020-2021 period. This increase significantly outpaces the rise in average house prices in England, which have grown by 12% over the same timeframe. This mismatch means that homeowners may find themselves with less cash than expected if they need to transition to a care home.
According to the financial services firm Just Group, the acceleration in care costs compared to house price appreciation is a trend observed across all English regions. Stephen Lowe, a director at Just Group, highlights the critical role of the home in funding care: “The home is often the most valuable asset which, under current rules, makes it a major source of finance for people funding their own care.”
Homeowners’ Plans and Government Delays
40% of homeowners aged 45 and above have indicated they would consider selling their homes to fund care, placing it above other sources such as pensions, investments, or state assistance. This statistic emerges from Just’s latest annual care report and underscores the dilemma many are facing.
However, proposed reforms intended to alleviate the financial burden of care are in limbo, with the government postponing the introduction of a lifetime care spending cap until autumn 2025. This delay means that, for now, individuals may continue to see their assets, including their homes, diminish to as low as £23,250 to qualify for care home support under the current means-tested system.
What the Proposed Plan Entails
The proposed plan aims to cap individual care spending at £86,000, covering only certain private contributions and not the total care costs. Additionally, it seeks to increase the asset threshold for receiving support from £23,250 to £100,000. However, with these reforms on hold, the financial landscape for prospective care recipients remains uncertain.
Regional Disparities and Future Uncertainties
The disparity in care costs and house prices across regions leads to significant variations in how long the proceeds from a home sale could cover care. For instance, in the North East of England, the lowest care costs mean a typical house could fund about four and a half years of care. In contrast, in London, where house prices are much higher, the same sale could fund nearly 11 years in a residential setting. Yet, this comes with a caveat, as the rate at which care costs are rising could further squeeze homeowners’ abilities to fund their care.
Stephen Lowe warns that these figures are optimistic, noting that individuals funding their own care often face higher fees than those partially supported by council funding. Furthermore, the need for specialist nursing care could drive costs even higher, exacerbating the financial strain on those needing care.
The Political Landscape and Voter Power
As the care sector grapples with funding pressures, the upcoming general election presents an opportunity for voters to scrutinise the solutions proposed by politicians. The delayed reforms and the increasing financial burden of care highlight the urgent need for a sustainable solution to support the aging population.
With the stark realities of care funding laid bare, it’s clear that the conversation around care costs, house prices, and government policy needs to continue. The balance between protecting one’s home and ensuring access to necessary care is delicate, and as society ages, finding a fair and workable solution becomes ever more critical.