Will YOU have to sell your home to pay for care? A typical £300,000 property would finance a care home for seven years…

Selling a property worth around £300,000 will pay off the costs of living in a care home for seven years, new research reveals.

The cost of care in a care home has risen by around 20 per cent to £816 a week or around £42,400 a year from 2020-2021.

That outpaces the rise in average house prices in England, which rose 12 per cent in the same period, potentially reducing the amount of cash a homeowner could raise if they need to move into a care home.

According to research by financial services company Just Group, healthcare costs have risen faster than house prices in all English regions during this time.

“Housing is often the most valuable asset, making it, under current rules, an important source of finance for people funding their own care,” says director Stephen Lowe.

Around 40 per cent of homeowners aged 45 and over surveyed for Just’s latest annual care report said they would sell their homes to pay for care, ahead of any other funding option such as pensions, investments or the State.

Reforms on how people will have to pay for care are currently on hold after the Government delayed the launch of a cap on spending on lifetime care until autumn 2025, after the next election.

The plan would introduce a cap of £86,000 on what an individual has to spend on care – but based on some, not all, of their private contributions rather than total costs – and would raise the threshold to start receiving support from £23,250. to £. 100,000.

“The ratio of house price to cost of care is a useful measure because around half of care home residents currently pay all their own expenses and a significant amount of funding comes from people selling their homes,” says Lowe. .

But regional differences in average house prices and care costs create huge disparities in how far housing wealth will stretch if care is needed.

Average care costs are lowest in the North East of England, at £35,672 a year, but house prices of £157,557 would cover approximately four and a half years of care.

Care rates in London are the second highest in the country after the south-east, at £46,852 a year, but are much higher than average house prices of £508,037 which would fund almost 11 years in a residential home.

However, Londoners’ ability to pay for healthcare is being limited because between 2020 and 2021 average house prices have increased by 3 per cent, but residential house rates have increased by 17 per cent.

Lowe says of the data in the table above: “These are optimistic figures because in the real world self-funders who cover all their own costs pay higher rates than those who receive some or all of municipal funding, while the costs would be even greater if specialist nursing care was needed.

‘Under the current means-tested social care system, those with assets of more than £23,250 have to pay for their own care and this will include their residence unless someone such as their spouse still lives there.

‘Reforms that could have helped protect home values ​​have been delayed and may never be implemented.

“The care sector is facing huge funding pressures and, as we approach the general election, voters should consider the responses politicians are suggesting.”

The map below shows the years of nursing care that would be funded, as well as the cost of residential care, if you were to sell an average priced home in a region of England.