Selling Your Home to Move Into a Care Home

Moving into a care home is one of the most significant financial decisions a family can face. The cost of residential care in England — often £800 to £1,500 per week or more — means that for many people, the family home becomes the primary source of funding. Yet selling hastily, without understanding the rules around the means test and the protections available, can result in families losing money, falling foul of deprivation of assets rules, or selling a property unnecessarily.

This guide explains how the local authority financial assessment works, what protections you have before you sell, how deferred payment agreements operate, and what the legal requirements are when the person moving into care no longer has full mental capacity. It covers the rules for England; Wales, Scotland, and Northern Ireland have their own separate frameworks.

How the local authority means test works

When someone moves into a care home on a permanent basis, the local authority carries out a financial assessment — commonly called a means test — to determine how much of the cost the person must pay themselves and how much the council will contribute.

The assessment looks at two things: income (such as pensions, benefits, and rental income) and capital (savings, investments, and property). For the 2025/26 financial year, the capital thresholds in England are:

The value of your home is generally included in the capital assessment once you move into a care home permanently, which means that for most homeowners, the property pushes them well above the £23,250 threshold. However, the rules contain two important protections: the 12-week property disregard and the mandatory disregard when a qualifying person lives in the property.

The 12-week property disregard

Under Schedule 2 of the Care and Support (Charging and Assessment of Resources) Regulations 2014, local authorities must disregard the value of your main home for the first 12 weeks of a permanent care home placement. During this period, the council assesses your care costs against your other capital and income only.

This protection serves a practical purpose: it gives families and the person in care time to make considered decisions about the property without being immediately responsible for the full cost of care from day one. During the disregard period, you can:

• Take legal and financial advice on whether to sell, let, or enter a deferred payment agreement
• Instruct a solicitor and estate agent without a deadline forcing a rushed transaction
• Apply for a deferred payment agreement so that the disregard continues beyond 12 weeks
• Ensure that a lasting power of attorney or other legal authority is properly registered if needed for the sale

After 12 weeks, if no deferred payment agreement is in place and no other disregard applies, the property value is included in the means test. At this point, if total capital exceeds £23,250, you are expected to self-fund the full cost of care.

Mandatory property disregards: when the home is never counted

In certain circumstances, the local authority must disregard the value of your property indefinitely — not just for 12 weeks. These mandatory disregards apply when any of the following people continue to live in the property as their main home:

• A spouse, civil partner, or cohabiting partner
• A close relative aged 60 or over
• A close relative who is incapacitated (that is, has a physical or mental incapacity that prevents employment)
• A dependent child under 18 of the person in care
• In certain circumstances, a close relative who gave up their own home to care for the person before they moved into residential care

When a mandatory disregard applies, the property is entirely excluded from the financial assessment for as long as the qualifying person remains in residence. This means there is no obligation — moral, legal, or financial — to sell the property while that person is living there.

You must tell the local authority when a qualifying occupant moves out or dies, at which point the disregard ends and the council will reassess the financial position. Failing to notify the council could result in an overpayment of local authority funding that must be repaid.

Deferred payment agreements: an alternative to selling

If no mandatory disregard applies and you do not wish to sell the property immediately after the 12-week period, the Care Act 2014 gives local authorities a duty to offer a deferred payment agreement (DPA) to people who meet the qualifying criteria.

How a DPA works

Under a DPA, the local authority pays your care home fees on your behalf. The debt accumulates as a legal charge secured against your property at the Land Registry, in the same way that a mortgage creates a charge on a property. Interest is charged on the debt at a rate set by central government guidance (typically around 3.5% to 4% per annum compound). An administration fee may also be charged.

The debt is repaid when:

• You choose to sell the property during your lifetime
• The property is sold after your death as part of your estate
• You repay the debt from other funds at any time

Who qualifies for a DPA?

To qualify for a local authority DPA in England, you must generally:

• Have capital (excluding the property) of no more than £23,250 at the time the DPA is agreed
• Have a property interest that can have a charge secured against it (a registered freehold or leasehold title at Land Registry)
• Not have a mortgaged property where the mortgage lender would take priority and significantly reduce the available equity

A DPA is a formal legal agreement that must be signed and registered at Land Registry. Once in place, you can keep the property for as long as you wish — renting it out (with the local authority's agreement), maintaining it, or leaving it vacant — provided the debt does not exceed a specified equity limit set in the agreement.

For more information on the broader costs of selling a property, see our guide to the hidden costs of selling a house.

Deprivation of assets: what you must not do

One of the most important rules to understand before moving into care is the concept of deprivation of assets. Under the Care and Support (Charging and Assessment of Resources) Regulations 2014 and the statutory guidance under the Care Act 2014, a local authority can treat a person as still owning an asset they have disposed of if it believes the disposal was made with the intention of reducing the amount they would otherwise have to pay for care.

Common examples that local authorities scrutinise

• Transferring the property to children or other relatives — either for free or at an undervalue, shortly before or after care needs arose
• Gifting large sums of money from the proceeds of a property sale to family members, with the intention of reducing assessable capital
• Paying off debts to family members (informal loans) in a way that reduces capital immediately before the financial assessment
• Purchasing expensive items or making large charitable donations shortly before the assessment

The significance of timing and intent

There is no fixed time limit within which transfers must have taken place to trigger a deprivation of assets finding. Local authorities look at the purpose and timing of the transfer. The statutory guidance says councils should consider whether avoiding the care and support charge was a significant motivation — this does not need to be the only motivation, but if it was a significant one, a finding of deprivation can follow.

If deprivation of assets is found, the local authority will treat you as if you still own the asset and calculate the means test accordingly. It may also seek to recover the care costs from the person to whom the asset was transferred, under notional capital rules or, in some cases, through legal action.

If you are considering releasing equity from your property before entering care — for entirely legitimate reasons, such as home adaptations or normal lifetime gifting within the annual allowance — you should take legal and financial advice first. See our guide on selling to release equity for more context on equity release options.

Mental capacity and power of attorney: managing the sale legally

A person moving into a care home may not always be able to manage their own financial affairs. If they have lost, or are at risk of losing, mental capacity, the legal ability to sell their property must be properly established before a sale can proceed.

Lasting power of attorney (LPA)

A lasting power of attorney for property and financial affairs is a legal document that allows a named attorney to make financial decisions — including selling a property — on behalf of the donor (the person who made the LPA). The LPA must be registered with the Office of the Public Guardian (OPG) before it can be used.

For the purposes of a property sale, the registered LPA gives the attorney full authority to instruct a solicitor, sign the contract for sale, transfer and completion documents, and deal with the proceeds. Land Registry requires a copy of the registered LPA to be submitted with the transfer application. See our guide on selling a property as power of attorney for a detailed walkthrough of the process.

Court of Protection deputyship

If no LPA was put in place before capacity was lost, the family must apply to the Court of Protection for a property and affairs deputyship order. This gives an appointed person the authority to manage the finances of someone who lacks capacity. Deputyship applications typically take four to six months and cost several thousand pounds in court fees and legal costs. The deputy is also subject to ongoing reporting obligations to the OPG.

This is why — if capacity is not yet in question but may become so — it is strongly advisable to put a lasting power of attorney in place as early as possible. An LPA registered now costs around £82 in registration fees (per person, per LPA) and can be prepared by a solicitor or online via the OPG's digital service.

Timing the sale: practical considerations

Deciding when to sell the property is one of the most consequential decisions in this process. The following factors all affect the right timing.

While the 12-week disregard applies

Selling within the first 12 weeks of a permanent placement is generally not advisable unless there are pressing practical reasons (such as the property being in serious disrepair or a cash purchaser being available at a good price). The disregard period is designed precisely to prevent rushed sales. Use this time to take advice, instruct a solicitor, and prepare the property documents properly.

After the 12-week period: DPA or sale?

Once the 12-week disregard ends, you face a choice:

• Sell the property and use the proceeds to fund care directly. This is simpler and avoids accumulating DPA debt, but it means you realise the property value immediately and that capital must then be spent down before the council contributes.
• Enter a deferred payment agreement and sell at a later date, perhaps when market conditions are better or when the person in care dies and the estate can deal with the sale. The disadvantage is that DPA interest accumulates at around 3.5% to 4% per annum, which can erode equity significantly over several years.
• Let the property while a DPA is in place. The rental income can be paid to reduce the accumulating debt. This requires the council's consent and the property must be properly maintained.

For families considering downsizing before a care need arises, our guide on selling to downsize explores the practical and financial aspects of that decision.

When speed matters

Where a sale is required to fund care, speed can be important but should not come at the cost of a significantly reduced sale price. A conventional estate agent sale, properly prepared, typically achieves the best price. If a faster sale is needed — for example, to clear DPA debt that is accumulating quickly, or because the property is vacant and costly to maintain — see our guide on how to sell your house fast for the options and their trade-offs.

The conveyancing process when selling for care

The legal process of selling a property to fund care is largely the same as any other residential sale. The main differences arise where an attorney or deputy is acting, or where a DPA charge needs to be released at completion.

Where an LPA or deputyship is involved

• The solicitor acting on the sale will need a certified copy of the registered LPA or court order to establish the seller's authority to sell
• Land Registry will require the LPA or court order to be submitted with the TR1 transfer form
• The attorney or deputy must act in the best interests of the donor or person lacking capacity at all times and should document decisions made on their behalf
• If the proceeds of sale are to be retained for care funding, the attorney must manage them prudently, generally in a separately designated bank account

Where a DPA charge must be released

• The local authority's legal charge against the property must be discharged (paid off) at completion from the sale proceeds
• Your solicitor will request a statement of the accumulated DPA debt from the council and arrange redemption on the same basis as a mortgage redemption
• The net proceeds after repaying the DPA debt, estate agent fees, and legal costs then belong to the person in care (or their estate) and will be brought into the means test going forward

Scotland, Wales, and Northern Ireland

This guide covers the rules for England. The devolved nations have their own care funding frameworks:

Key steps when preparing a property for sale from care

1. Confirm the legal authority to sell. Check whether the person in care retains mental capacity to manage the sale themselves, or whether a registered LPA or court order is needed. Do not instruct an estate agent or solicitor until the legal position is clear.
2. Notify the local authority. Inform the council of your intention to sell (or to apply for a DPA). The financial assessment team will need to know the expected sale price and the anticipated timescale.
3. Apply for a deferred payment agreement if appropriate. If you are within the 12-week disregard and cannot complete a sale within that window, applying for a DPA prevents care costs from becoming an unsecured debt.
4. Instruct a solicitor early. A solicitor experienced in both conveyancing and Court of Protection work is preferable if an LPA or deputyship is involved. They can manage both the property sale and compliance with the OPG's reporting requirements.
5. Prepare the property documents. Gather title deeds, the Energy Performance Certificate, warranties, building regulation certificates, and any other documents needed for the TA6 and TA10 forms. Preparing these before marketing reduces delays once a buyer is found.
6. Take independent financial advice. A care fees specialist or independent financial adviser regulated by the FCA can advise on the interaction between care funding, the means test, investment of sale proceeds, and any potential Inheritance Tax planning.

Sources

• Care Act 2014 — legislation.gov.uk
• Care and Support (Charging and Assessment of Resources) Regulations 2014, SI 2014/2672 — legislation.gov.uk
• Department of Health and Social Care — Care and support statutory guidance (updated 2023) — gov.uk
• NHS — Care home fees and funding — nhs.uk
• Age UK — Paying for permanent residential care (factsheet FS10) — ageuk.org.uk
• Age UK — Paying for care at home if you have a partner (factsheet FS39) — ageuk.org.uk
• Office of the Public Guardian — Make a lasting power of attorney — gov.uk/power-of-attorney
• Society of Later Life Advisers (SOLLA) — societyoflaterlifeadvisers.co.uk
• DLUHC — Deferred payment agreements: guidance for local authorities — gov.uk
• Mental Capacity Act 2005 — legislation.gov.uk

Related guides

• Selling a House for Elderly Parents
• Selling Property to Pay for Care Fees

Frequently asked questions