Selling Property to Pay for Care Fees

The decision to sell a home to pay for care is fundamentally different from an ordinary sale. The financial stakes are high — residential care in England typically costs £800 to £1,500 per week or more — and the legal and regulatory framework governing how property is treated in the care funding assessment is complex. Getting the decision wrong can mean paying unnecessarily for care, or falling foul of deprivation of assets rules that can leave families worse off than if they had taken no action at all.

This guide focuses on the financial and funding dimension of selling to pay for care: what the means test involves, how and when property value is included, what alternatives to selling exist, and what the rules say about transferring property to family. For guidance on the practical process of moving into a care home and managing the property transaction itself, see our companion guide on selling your home to move into a care home. The rules described here apply to England; Scotland, Wales, and Northern Ireland operate different care funding frameworks.

How the local authority means test works

When someone moves into a care home on a permanent basis in England, the local authority carries out a financial assessment under the Care Act 2014 to determine how much of the cost they are expected to meet themselves. The assessment examines both income (pensions, benefits, rental income) and capital (savings, investments, and property).

For the 2025/26 financial year, the capital thresholds in England are:

For most homeowners, their property value alone pushes them far above the £23,250 upper threshold. However, the means test rules contain important protections that determine when — and whether — the property value is brought into the calculation at all.

The 12-week property disregard

Under Schedule 2 of the Care and Support (Charging and Assessment of Resources) Regulations 2014, a local authority must disregard the value of your main home for the first 12 weeks of permanent residential care. During this period, the financial assessment is based on your other capital and income only.

This protection exists so that families are not forced into a rushed sale from day one of a care placement. The 12-week window gives you time to:

• Take independent legal and financial advice on whether to sell, let, or apply for a deferred payment agreement
• Verify whether any mandatory disregard applies — for example, because a spouse or qualifying relative lives in the property
• Instruct a solicitor and estate agent without an immediate funding deadline forcing a below-market sale
• Confirm that a Lasting Power of Attorney is registered if the person in care may lack capacity to manage the transaction themselves

After the 12-week period, if no further disregard applies and no deferred payment agreement is in place, the property value is included in the means test. If total capital then exceeds £23,250, you are expected to self-fund the full cost of care. The local authority will not simply stop paying your fees at the end of 12 weeks — it will reassess and adjust the contribution accordingly — but any shortfall between the contribution and the full fee becomes your responsibility.

Mandatory property disregards: when the home is never counted

Certain people who continue to live in the property as their main home trigger a mandatory and indefinite disregard of the property value from the means test. While any of these qualifying occupants remains in residence, the local authority cannot include the property in the financial assessment at all.

The qualifying occupants are:

• A spouse, civil partner, or cohabiting partner of the person in care
• A close relative aged 60 or over
• A close relative who is incapacitated and unable to sustain employment due to physical or mental incapacity
• 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 in care before they moved into residential care

This is an important protection for couples where one partner enters care while the other continues to live in the family home: the property value is excluded from the means test for as long as the partner remains resident, regardless of how long the care placement lasts. There is no requirement to sell or to enter a deferred payment agreement while a qualifying occupant is in residence.

You must inform the local authority immediately if a qualifying occupant moves out or dies. The disregard ends at that point and the council will carry out a fresh assessment. Failing to report this change could result in an overpayment of council funding that must be repaid.

Deferred payment agreements: deferring the sale decision

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

How a deferred payment agreement works

Under a DPA, the local authority pays your care home fees on your behalf. The accumulated debt — including interest charged at a rate set by central government guidance, typically around 3.5% to 4% compound per annum — is secured against the property as a legal charge registered at HM Land Registry, in the same way a mortgage creates a charge on a property.

The debt is repaid when one of the following happens:

• You choose to sell the property during your lifetime
• The property is sold by your estate after your death
• You repay the accumulated debt from other funds at any point

Who qualifies for a deferred payment agreement?

To qualify for a 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)
• Have sufficient equity in the property that the charge can meaningfully secure the debt

The interest cost over time

Because interest compounds, a DPA is a less attractive option the longer it runs. The table below illustrates how a £50,000 accumulated care debt grows at 4% compound interest:

A DPA therefore makes most sense when the property is expected to be sold within a few years, when rental income from the property can offset the accumulating debt, or where preserving the asset for inheritance purposes is a priority and the interest cost is accepted as the price of that flexibility.

For a broader view of equity-related decisions, see our guide on selling to release equity.

Selling versus renting the property

Where no mandatory disregard applies and a DPA is in place, you have a further choice: sell the property now, or let it while the DPA runs.

Arguments for selling

• Realises the full capital value immediately, giving certainty about your financial position
• Ends the ongoing costs and obligations of property ownership — buildings insurance, maintenance, void periods, and letting agent fees
• Simpler to manage, particularly where mental capacity or family dynamics are a concern
• Avoids DPA interest accumulating over an extended period

Arguments for renting under a DPA

• Preserves the property asset and any future capital appreciation
• Rental income can be directed to reduce the DPA debt, slowing its growth
• Provides flexibility to sell at a time of your choosing rather than under pressure
• May be preferable if the person in care or their family has strong reasons to retain the property (for example, a family home with sentimental significance)

Letting the property under a DPA requires the local authority's consent and must comply with landlord and tenancy obligations. It is not a simple option to manage remotely, particularly if the person in care lacks capacity and an attorney or deputy must oversee the tenancy. Where family members are considering helping elderly parents manage a sale or tenancy, our guide on selling a house for elderly parents covers the legal authority required.

Deprivation of assets: what you must not do

One of the most consequential rules in care funding law 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 intended — even partly — to reduce the amount they would otherwise pay for care.

Common examples local authorities scrutinise

• Transferring the property to adult children or other relatives, whether for free or at an undervalue, before or shortly after care needs arose
• Gifting significant sums from property sale proceeds to family members with the aim of reducing assessable capital
• Paying informal debts to family members from capital immediately before the means test
• Putting the property into a trust arrangement in a way designed primarily to shelter assets from the care funding assessment

What happens if deprivation is found

There is no fixed time limit on how far back a council can look; what matters is whether avoiding care charges was a significant motivation for the transfer. If a deprivation finding is made, the local authority will treat you as if you still own the asset and calculate the means test on that basis. In some circumstances, the council can also seek to recover the care costs from the person to whom the asset was transferred, under notional capital rules or through legal action.

The safest approach is to take legal and financial advice before making any significant transfers of property or capital, particularly where care needs are already apparent or likely. Transfers made many years before care needs arise and for genuine reasons — such as lifetime gifts within normal annual allowances — are far less likely to attract a deprivation finding.

Mental capacity and managing the sale

If the person whose property is to be sold no longer has mental capacity to manage their own finances, the legal authority to conduct the sale must be properly established before any transaction can proceed.

Lasting Power of Attorney

A Lasting Power of Attorney (LPA) for property and financial affairs registered with the Office of the Public Guardian gives the named attorney full legal authority to manage the sale: instructing solicitors, signing contracts, and dealing with the completion proceeds. The LPA must be registered before it can be used — an unregistered LPA has no legal effect.

For a detailed walkthrough of the process, see our guide on selling a property as power of attorney. Where no LPA is in place and capacity has already been lost, the family must apply to the Court of Protection for a deputyship order — a process that typically takes six to twelve months and costs significantly more than registering an LPA.

If capacity is not yet in question but may become so in the future, making a Lasting Power of Attorney now is strongly advisable. An LPA registered with the OPG currently costs £82 per person in registration fees and provides a legal framework that avoids the need for Court of Protection proceedings later.

Practical steps: how to approach a care-funding sale

1. Request a care needs assessment and financial assessment. Contact the local authority's adult social care team. Confirm whether the 12-week property disregard applies and ask about the DPA process if you are not planning to sell immediately.
2. Check for qualifying occupants. Establish whether any person living in the property triggers a mandatory, indefinite disregard. If so, no sale decision is required for now.
3. Confirm legal authority. Establish whether the person in care retains mental capacity to manage the sale, or whether a registered LPA or court order is required. Do not instruct a solicitor or estate agent until this is resolved.
4. Take independent financial advice. A specialist care fees adviser accredited by the Society of Later Life Advisers (SOLLA) can model the financial implications of selling now, using a DPA, or letting the property, and advise on the interaction with the means test, investment of proceeds, and any tax considerations.
5. Apply for a deferred payment agreement if appropriate. If you are not yet ready to sell and the 12-week disregard is running down, applying for a DPA prevents care costs from becoming an unsecured liability. The DPA application must be submitted to the local authority before the disregard period ends.
6. Prepare the property for sale. Whether you sell now or later, gathering title documents, Energy Performance Certificate, warranties, and building regulation certificates in advance reduces delays when a buyer is found. If speed is important once the decision to sell is made, see our guide on how to sell your house fast.
7. Notify the local authority of the sale. If you are selling while a DPA is in place, the council must be informed so that it can calculate the outstanding debt and arrange redemption of its charge at completion.

Scotland, Wales, and Northern Ireland

The rules described in this guide apply to England. The devolved nations operate separate care funding frameworks with different capital thresholds:

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
• GOV.UK — Deferred payment agreements guidance for local authorities — gov.uk
• NHS — Care home fees and funding — nhs.uk
• Age UK — Paying for permanent residential care (Factsheet 10) — ageuk.org.uk
• Age UK — Deprivation of assets in social care — ageuk.org.uk
• MoneyHelper — Paying for care in a care home — moneyhelper.org.uk
• Society of Later Life Advisers (SOLLA) — societyoflaterlifeadvisers.co.uk

Frequently asked questions