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Factsheet 38 April 2014 1 of 28

Treatment of property in the means test for permanent care home provision

Factsheet 38 April 2014


About this factsheet

This factsheet explains how property is dealt with in the local authority means

tested financial assessment for the provision of care home accommodation. It

is aimed at individuals who are 60 and over. It covers a part of the overall

residential charging rules and should be read in conjunction with our other

factsheets on care home charging, particularly Age UK’s Factsheet 10,

Paying for permanent residential care.

The information in this factsheet is correct for the period April 2014 – March

2015 but rules and figures sometimes change during the year.

This factsheet describes the situation in England. There are differences in the

rules for funding care in a care home in Northern Ireland, Scotland and

Wales. Readers in these nations should contact their respective national

offices for information specific to where they live – see section 16 for details.

For details of how to order other factsheets and information materials

mentioned in this factsheet go to section 16.



Inside this factsheet

1 Recent developments 3

2 Property and the local authority means test 4

2.1 Valuation of property 5

3 Property that is not included 5

3.1 Discretion to disregard 7

3.2 The 12 week property disregard 7

3.3 Moving from a disregarded property 8

4 Ownership of property 9

5 Valuation of jointly owned property 9

5.1 The statutory scheme 10

5.2 The trust purpose 11

5.3 A prompt and independent property valuation 12

5.4 CRAG - statutory guidance 13

6 Pension Credit and property 14

6.1 Pension Credit and jointly owned property 15

7 Deferred payment agreements 15

7.1 Deferred payments and self top-ups 17

8 Renting out your property 18

9 Giving away your assets 19

10 Business assets 19

11 Local authority powers to collect debts 20

12 Paying for yourself 21

13 Park/mobile homes 21

14 Challenging local authority and benefits decisions 22

15 Useful organisations 23

16 Further information from Age UK 26



1 Recent developments

At the time of writing (February 2014), the Care Bill is moving through its

final stages before becoming law. Royal Assent is planned for April 2014.

However, adult social care law will not noticeably change in April this year as

there will then be consultations on various regulations and guidance aimed

at supporting the basic legislation, for example regarding a new, single,

national eligibility criteria. These will be published and laid before Parliament

in October 2014.

The Care Bill will replace existing social care legislation and becomes

operational in April 2015. The Dilnot-related funding reform elements of the

Bill are presently planned for introduction in April 2016. Other provisions

such as those relating to eligibility and assessment’ carer’s rights’ advice

and information’ deferred payments and commissioning are due to be

implemented in April 2015. There are also other Care Bill areas relating to

mainly to the NHS and the Francis Enquiry.

The new legal duties and concepts that are set out in the Care Bill are being

introduced in the context of further local government funding cuts. This may

affect present adult social care service provision and also local planning for

the Care Bill’s introduction, for example regarding the requirement for all

those in a locality with needs to have an assessment before April 2016 to

instigate their new care accounts in the form of personal budgets. Also the

new rights to support services for carers who meet the new carers’ eligibility

criteria.

Definitions of terms used in the text

In this factsheet references to the ‘local authority’ or ‘council’ will refer to

the adult social services department of the local authority or council. The

relevant social services department may be called the Community

department or ‘adult social services’ or ‘older persons’ department or team’.

We will use the term ‘local authority’ in this factsheet to describe this type of

service. However, generally, the term ‘local authority’ can also describe: a

county council in England, a district council for an area in England for which

there is no county council, a London borough council, or the Common

Council of the City of London.



The term ‘care home’ is used to mean any home that is registered with the

Care Quality Commission (CQC) to provide a service. It includes local

authority homes and independent homes, which may provide nursing care as

well as personal care. These are all inspected and monitored by the Care

Quality Commission based on national standards. The CQC’s terms for them

are nursing home care home. A specialist service such as dementia care may

also be added to the description.

2 Property and the local authority means test

If the local authority assists with your care home placement, it will also carry

out a means tested financial assessment to see whether you should

contribute to the cost. Before you can receive any financial assistance with

the cost of care home accommodation, the local authority must assess your

care needs, decide that you meet their eligibility criteria and agree that you

need residential care. This is usually after looking into all other alternative

care and support arrangements within your present accommodation.

Note: Local authorities must adhere to statutory guidance set down in a

Government document called the Charging for residential accommodation

guide (CRAG) 2014, which is written in support of The National Assistance

(Assessment of Resources) Regulations 1992 (S.I. 1992/2977). CRAG is

updated each March/April. This Factsheet is mainly based on the CRAG

guidance.

The December 2013 CRAG can be viewed on the Department of Health

website at:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/

264477/CRAG_33A_December_2013.pdf Property is one of the capital

assets listed in CRAG as potentially being eligible for inclusion in the

residential care means tested financial assessment. Other forms of capital

could include savings and investments. Your income will also be taken into

account in the means test.

If you are a care home resident with capital over certain limits you generally

have to meet the full cost of your accommodation and personal care in a care

home.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/264477/CRAG_33A_December_2013.pdf

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/264477/CRAG_33A_December_2013.pdf



For the financial year 2014/15, the upper capital limit for the means test

in England is £23,250.

General information on the charging rules can be found in the Age UK’s

Factsheet 10, Paying for permanent residential care. Further information

about getting a social care assessment is contained in Age UK’s Factsheet

41, Local authority assessment for community care services.

2.1 Valuation of property

If a property is not disregarded its value will be assessed at its market value,

less any mortgage or loan secured on it and less 10% of its value where

there would be expenses involved in selling it. The 10% rule is only for

calculating the value of a property before its sale. Once the property has

been sold the resident will be treated as having the actual share of the sale

proceeds he or she receives once any secured debts and the actual

expenses of sale have been paid.

3 Property that is not included

The value of your home is not included in the means test for any temporary

stay in a care home. For permanent care, any interest in your former home

will generally be taken into account as capital. There are exceptions to this

rule, which are set out below.

The value of your former home will be disregarded (ignored) if it is occupied

by:

your partner (husband, wife, civil partner or someone you live with as

though you are married or civil partners); or

a relative who is 60 years old or over, or a younger relative who is

‘incapacitated’; or

a former partner who is divorced or estranged from you but who is a lone

parent; or

a child under 18 years who you are liable to maintain.



CRAG states that the term ‘relative’ includes: parent (including an adoptive

parent); parent-in-law; son (including an adoptive son); son-in-law; daughter

(including an adoptive daughter); daughter-in-law; step-parent; step-son;

step-daughter; brother; sister (the spouse, civil partner or unmarried partner

of any of those previously listed); grandparent; grandchild; uncle; aunt;

nephew or niece.

The term ‘incapacitated’ is not defined in CRAG. However, it states that it

should apply to someone who is receiving one (or more) of the following

social security benefits: incapacity benefit (IB), severe disablement

allowance, disability living allowance, attendance allowance, constant

attendance allowance, or an analogous benefit.

If a person does not receive any of the benefits listed above but the degree of

incapacity is equivalent to that required to qualify for any one of those

benefits. Medical or other relevant evidence may be needed before a

decision is reached.

No new incapacity benefit claims have been accepted since 31st January

2011. New applicants must now claim Employment and Support Allowance

ESA) instead. Existing claimants will remain on incapacity benefit but will be

reviewed to see which of the two levels of ESA they will be transferred onto.

This process is being carried out between 2012 and 2014. Following a

review, the transfer to ESA is automatic.

Note: Disability Living Allowance (DLA) is being replaced by the Personal

Independence Payment (PIP). New claimants who would previously have

claimed DLA must now apply for PIP. If you presently receive DLA, this will

continue but if your circumstances change, you will be assessed for PIP

rather than DLA. Everyone else in receipt of DLA will be assessed for PIP

between April 2015 and 2018.



Currently, Universal Credit (UC) is not included as income to be taken into

account. However, the Department of Health is ‘working through’ the

implications of the introduction of Universal Credit for charging. It is expected

that universal credit will be included as income to be taken into account (see

the government circular LAC(DH)(2013)2). UC will gradually replace benefits

Income support, Housing Benefit, Income-based Job Seeker’s Allowance,

Income-related employment and Support Allowance, Working Tax Credit and

Child Tax Credit

Other benefits changes that are taking place during 2014/2015 are set out in

Age UK’s benefits-related factsheets and information guides.

3.1 Discretion to disregard

The local authority also has discretionary power to disregard the value of the

property where it is the home of someone else not included on the above list,

such as a relative under 60 who has been caring for the resident for a

substantial period or a friend who is over 60. The authority does not have to

exercise this power but should give individual consideration to any requests

to do so.

Note: Although the qualifying age for pensions and other related benefits is

increasing, the Government has decided to keep the age where a property is

disregarded where a relative is living in it at 60 years.

3.2 The 12 week property disregard

The local authority must disregard property for all residents for the first 12

weeks of being a permanent resident in a care home funded by the local

authority. If your stay was initially temporary the 12 weeks run from the date it

is decided your care is permanent. If your property is sold within this 12-week

period the disregard ceases to have effect from the date of sale and the

proceeds will be counted as capital.

If you enter permanent care and initially pay your care fees without local

authority assistance, the 12-week property disregard should be applied from

the date you subsequently qualify for local authority assistance if you have

not sold your property.



Many local authorities have previously argued that the 12-week period runs

from the date of admission to permanent care rather than the date when

assistance is required from the local authority. The Department of Health has

now clarified that the 12-week property disregard includes self-funding

residents who have been permanently in a care home for more than 12

weeks and who find that they need local authority assistance because of their

financial situation – see Local Authority Circular LAC (DH) (2009)3 and

CRAG for further details.

If a local authority does not offer you the 12-week disregard on the grounds

that you have been a permanent and self-funding resident for too long, you

should query this decision in light of the above information.

Action: If the local authority knows that you own your own home but doesn’t

tell you about the available disregards, you should complain using the

authority’s complaints procedure. The local authority could be liable to

reimburse you if it fails to allow you a mandatory disregard and you pay more

towards your care costs than you should have as a consequence.

Whilst your property is subjected to the 12-week property disregard you can

top-up your residential care payments from certain resources of your own.

See CRAG section 11.011 for further information.

3.3 Moving from a disregarded property

Where a spouse, partner or other relative lives in a disregarded property, they

may at some point wish to move, perhaps to somewhere smaller and more

manageable.

However the disregard only applies to property and once it has been sold the

resident’s share of the proceeds could be taken into account in the financial

assessment.



Government guidance has suggested that it would not be reasonable for local

authorities to treat a resident as having deprived themselves of capital on

purpose if they make part of their share of the proceeds from the sale available

to their spouse or civil partner to buy a more suitable property. Unmarried

partners and other relatives on whose account the original property has been

disregarded should ask to be treated in the same way as a spouse by the

authority if they wish to move.

The current guidance does not cover some related issues, such as how any

funds left over after the purchase should be apportioned or whose name the

new property should be put into. The approaches adopted by individual local

authorities on these and other related points may vary.

4 Ownership of property

In some cases there may be a difference between the legal and the beneficial

ownership of a property. You are treated as having a beneficial interest in a

property if you would be entitled to a share of the proceeds if it were sold. If

you contribute towards the purchase price of a property, or otherwise

contribute towards it later on, you may be able to establish a beneficial

interest in the property, even if it is legally owned by someone else.

If a property was purchased under the ‘right to buy’ scheme at a discounted

price, the person who attracted the discount may be treated as having a

beneficial interest equivalent to the discount obtained, even if he or she did

not contribute any money towards the purchase.

If the beneficial interests in a property are disputed it may become necessary

to consult a solicitor. If more than one person has a beneficial interest then

the property will be valued as if it is jointly owned.

5 Valuation of jointly owned property

Jointly owned property is valued differently than other forms of capital

in the means test in that the local authority has to take account of joint

owners having different interests, rather than assuming that each has

an equal interest.



Where a care home resident is joint owner of a property the local authority

has to base its valuation on the sale value of the resident’s beneficial interest

in the property to a ‘willing buyer’ on the open market. The local authority

should not simply assess the value of the property as a whole (or equivalent

properties) and then divide it up into the shares owned to achieve an

assumed valuation for the means test; and then assert that this is the true

value of the beneficial interest.

In recent years there has been controversy over the valuation of jointly owned

property in the residential care means test. Age UK has campaigned for

clarification so that service users can have more understanding regarding

their rights and obligations. The Department of Health has provided helpful

extra guidance in Local Authority Circular (DH) (2010)2, which is discussed

below.

5.1 The statutory scheme

The statutory framework for charging for residential care is set out in the

National Assistance Act 1948 (the 1948 Act). The National Assistance

(Assessment of resources) Regulations 1992 (the 1992 Regulations) is

secondary legislation based on the statute. The Charging for residential

accommodation guide (CRAG) 2014 provides further statutory guidance.

CRAG must generally be followed by local authorities when administering the

national charging scheme because it is directly based on the 1948 Act and

the 1992 Regulations. Case law precedents further clarify how all of these

elements should be interpreted in specific circumstances.

Regulation 27 in the 1992 Regulations states that:

(2) Where a resident and one or more other persons are beneficially

entitled in possession to any interest in land –

(a) the resident’s share shall be valued at an amount equal to the

price which his interest in possession would realise if it were sold

to a willing buyer…; and

(b) the value of his interest so calculated shall be treated as if it

were actual capital.



Regulation 27 clearly shows that it is the value of the resident’s interest that

should be included in the means test valuation not the value of the property

as a whole. A willing buyer would only be willing to pay the current market

value for that beneficial interest.

CRAG is based on this and, at paragraphs 7.017–7.020, suggests that the

value of a joint interest in property will be heavily influenced by whether the

other joint owner(s) or another interested party is willing to buy the resident’s

share. If not, it may be unlikely that an outsider would be willing to buy into

the property. In these circumstances the value of the interest, even to a willing

buyer, could be very low or could effectively be nil. The Local Government

Ombudsman has previously suggested that a local authority should have

‘significant evidence or opinion giving it reason to disagree’ when refusing to

accept that an interest in jointly owned property had a low or nil value

(Complaint 03/C/09384).

5.2 The trust purpose

For the resident’s beneficial interest to have a value to the willing buyer they

must be able to realise the value within it. This may relate to their potential

ability to apply to a Court to enforce sale of the whole property. When faced

with a request such as this a Court must have regard to section 14 of the

Trusts of Land and Appointment of Trustees Act 1996 (the 1996 Act), and

section 15 (1), which requires the following considerations:

(a) The intentions of the persons (if any) who created the trust [jointly

owned property] at the date of purchase of the home;

(b) The purposes for which the property subject to the trust is held.

Point (b) relates to the purpose for which the trust (legal arrangement to

jointly own property) was set up. Whether this purpose is still subsisting at the

time of the means test is central to the attribution of value to the resident’s

beneficial interest. This is because it may create an impediment to an

intended enforced sale once purchased.



There are two leading cases that provide guidance on this point for the

purposes of residential care charging. In the case of Wilkinson v CAO1 the

purpose of a gift of property was not to provide a home. Mrs Wilkinson’s

share in a jointly owned property came to her as an inheritance on her

mother’s death. It was an absolute gift to Mrs Wilkinson and her sister, in

equal shares, with no restriction or other intended purpose. Here Mummery

LJ decided that a sale could be enforced thus creating a market value for Mrs

Wilkinson’s beneficial interest. This can be contrasted with the earlier case of

Chief Adjudication Officer v Palfrey2. Here, Mr Palfrey, a joint property owner,

had gone into residential care and the question arose as to how his share in

the family home should be valued for the purpose of assessing his

entitlement to Income Support. The house had been acquired by him and his

daughter as beneficial joint tenants. Hobhouse LJ concluded that, even

though Mr Palfrey was no longer present:

Where the capital asset is a jointly owned dwelling house held for the

purpose of accommodating the joint owners and that purpose is still

subsisting, there is nothing obscure or abstruse in the conclusion that

the amount of capital which the applicant’s joint possession of that

dwelling house represents may fall, for the time being, to be quantified

in a nominal amount.

Based on this reasoning, the ‘subsisting’ purpose would disappear if the joint

tenant vacated the property at some future point.

5.3 A prompt and independent property valuation

Local authorities should obtain a prompt, independent, professional valuation

if they are unsure of the resident’s share or if their valuation is disputed by the

resident. Local Authority Circular (DH) (2010)2 reiterated this requirement,

providing the following guidance:

1 [2000] EWCA civ 88

2 [1995] 11 LS Gaz R 39, (1995) Times 17 February



20. Paragraphs 7.017 to 7.020 of CRAG provide guidance on the

treatment of shared property in the financial assessment for residential

charging. As part of this guidance CRAG says that if the local authority is

unsure about the resident's share, or their valuation is disputed by the

resident, again a professional valuation should be obtained.

21. Where a valuation is disputed, it is desirable the dispute should be

resolved quickly. We would expect councils to obtain an independent

valuation of the resident’s beneficial share of the property and try to

establish an agreed valuation within the 12-week disregard period. This

will enable councils to work out what charges a resident should pay and

enable the resident, or their representative, to consider whether to seek

a deferred payments agreement with the council.

The ‘12 week disregard period’ refers to the property disregard, discussed

above in section 3.2, for all residents for the first 12 weeks of being a

permanent resident in a care home funded by the local authority.

Given the above case precedents about ‘subsisting’ purpose, it is essential

that, in the case of a dispute, an independent valuer is suitably skilled to

understand these concepts along with their awareness of the general CRAG

guidance and 1992 Regulations so that they can clearly explain their

reasoning.

5.4 CRAG - statutory guidance

It is important to remember that both CRAG and Local Authority Circulars

exist under section 7(1) of the Local Authority Social Services Act 1970. This

means that local authorities have a duty to act in accordance with this type of

guidance unless there is an exceptional reason not to do so. Unjustifiable

delays in obtaining an independent professional valuation can be challenged

through the local authority complaints procedure. It may also be necessary to

refer the complaint to the Local Government Ombudsman in some

circumstances.

If you are told that the resident’s share has a value due to the following

reasons you should seek advice:

the local authority has taken the value of the property and just divided it by

the number of joint owners;



the local authority will ‘offer’ to be the willing buyer; or

any willing buyer would be able to force a sale.

The type of advice required will relate to the case facts. You may be able to

clarify the issue by phoning an advice line such as Age UK’s one or by visiting

local advice service. However, in some cases it may be necessary to obtain

advice from a property lawyer or other professional who is expert in the

correct approach to property valuation.

6 Pension Credit and property

For Pension Credit, the value of your home is ignored for periods of

temporary care. If your care is permanent, the value of your property can be

ignored for up to 26 weeks (or longer if reasonable) as long as steps are

taken to dispose of it. You can still receive Pension Credit during this period if

you qualify based on your income and capital other than your former home.

If you are in permanent care but your house is not up for sale, the value of

your interest in your former home will generally be included in the means test

for Pension Credit. A former home still inhabited by:

your partner (husband, wife, civil partner or someone you live with as

though you are married or civil partners); or

a relative who is 60 years old or over, or a younger relative who is

‘incapacitated’; or

a former partner who is divorced or estranged from you but who is a lone

parent

is disregarded under similar rules to those used by the local authority, but

there is no discretionary disregard. So if the local authority has used its

discretion to ignore the value of your home or arranged for a deferred

payment it will still be taken into account for Pension Credit.

As there is no upper capital limit for Pension Credit, a resident with a low

income and a low-value property might in some circumstances be able to

claim Pension Credit while the property is being taken into account in the

assessment.

See Age UK’s Factsheet 48, Pension Credit, for further information.



6.1 Pension Credit and jointly owned property

The Pension Service value jointly owned property as if it is held in equal

shares unless you own it jointly as ‘tenants in common’ in which case it is

your actual share that is valued. If there is little or no market for the care

home resident’s share in the property, its value may be low or even nil,

particularly if the joint owner lives in the property.

If you are unhappy about the valuation you should appeal. If the property is

subsequently sold, you will be treated as having the share of the proceeds to

which you are entitled.

7 Deferred payment agreements

If your property is taken into account in the means test you may be able to

enter into a ‘deferred payment agreement’ under which the local authority

agrees to provide funding as a loan, to be repaid when the property is sold at

a later date. This enables residents who do not wish to sell their former home

immediately, or who are unable to sell it quickly enough to pay for their care,

to get help with their fees. This arrangement can only relate to the property

that you have lived in prior to moving into a care home.

Local authorities have discretion about whether to offer deferred payments in

individual cases but must consider each application on its merits. They should

not operate blanket policies to refuse applications from certain groups without

giving them due consideration. For example, it may be possible to approve a

deferred payments agreement request where there is an existing mortgage

on a property or where it is jointly owned by other people, providing the

appropriate consent can be obtained.

Note: Local authorities have been told to make residents (and potential

residents) aware of their deferred payments scheme, and to explain

which residents they are most likely to help.

If they have not mentioned their scheme you should enquire about it. It

should be among the choices discussed with you when you are considering

how best to fund your care home placement.



In Local Authority Circular (2009)28, Charge for residential accommodation –

CRAG Amendment, local authorities are advised that: ‘[a local authority]

could be challenged if they did not consider exercising their discretion to offer

deferred payments in individual cases’.

The Local Government Ombudsman (LGO) has found maladministration

where a local authority failed to introduce a deferred payments scheme and

also where a local authority did not offer a deferred payment and the client

incurred loss as a result. The amount of the loss was repaid to the claimant.

You can get further information from the LGO if you visit www.lgo.org.uk

The local authority should advise you to seek independent financial advice if

you want to enter into a deferred payment agreement.

If, having ensured that you understand what you are committing yourself to,

the local authority agrees the deferred payment agreement, you will receive

the agreement in writing. You may be charged for the costs of land registry

searches and other such legal expenses. The agreement will last until the

date you terminate it (for instance because you have sold your property), or

until 56 days after your death.

If your request is refused, or you think the local authority has placed

excessive limits on who can use the agreements, you should complain. The

reason for refusal should be put in writing and you should receive a copy.

Local authorities should not refuse to enter into a deferred payment

agreement merely because you have other capital that is below the upper

capital limit (£23,250).

When you enter into a deferred payment agreement, the local authority will

calculate how much you can afford to contribute towards the cost of your care

from your income and other capital. The local authority pays the difference

between your contribution and the contract price it has agreed with the home

for your care, to be repaid when the property is sold.

http://www.lgo.org.uk/



With your agreement, the local authority places a legal charge on your

property to secure the deferred amount, which accrues to be repaid at a later

date. If the amount owed reached such a level that, if it were repaid, your

remaining capital would be below the upper capital limit, the debt would

accrue from then more slowly at the ‘tariff income’ rate (£1 per week for every

£250 of capital above the lower capital limit) until your capital falls to the

lower limit (£14,250). Tariff income is explained in more detail in Age UK’s

Factsheet 10, Paying for permanent residential care.

Local authorities have been advised to make people aware of their

entitlement to social security benefits such as Pension Credit and Attendance

Allowance (AA) or Income Support and Disability Living Allowance (DLA)

(care component)/ Personal Independence Payment (daily living component),

for younger claimants. Residents who qualify for AA/DLA (care component)/

Personal Independence Payment (daily living component) and are receiving

interim funding while their property is up for sale, can receive payments as a

retrospective self-funder as the local authority will eventually be repaid in full.

If you are not putting your property up for sale immediately you will not

usually be able to claim means-tested benefits such as Pension Credit but

you can still receive AA/DLA (care component)/ Personal Independence

Payment (daily living component) if you will be repaying the assistance

provided by the local authority at some point in the future.

During the period of the agreement no interest can be charged but if your

property remains unsold for longer than 56 days after your death, interest

may start to accrue on the debt.

7.1 Deferred payments and self top-ups

If you have chosen a care home that is more expensive than the local

authority would usually pay to meet your needs you may still be able to be

placed in your ‘preferred accommodation’ as CRAG allows you to top-up from

certain resources of your own if you have made a deferred payments

agreement. This is from disregarded earnings, income and capital identified in

the local authority means test.



You may also be able to use other capital resources, including the value of

the property that is subject to the deferred payments agreement, with the

proviso that you must be left with total capital resources under the means-test

to the value of the lower capital limit (£14,250) and that where the value of

the property is used as “collateral” for top-ups, the amount of the top-up is

added to your deferred contributions. This amount is eventually repaid when

the property is later sold.

The local authority has discretion over whether a deferred self top-up can be

allowed in your circumstances. Usually it will consider whether you are likely

to be able to meet the full cost, including the top-up, for the duration of your

placement from your income and capital (including the value of your property)

without needing to turn to the local authority for financial assistance in the

future.

Where you are making top-up payments in the circumstances described

above, and where the value of the self top-up is not added to the deferred

contribution because it is not made from the value of your property, the self

top-up must be treated as part of your income.

8 Renting out your property

You may want to rent out your property and put the income generated

towards your care home fees. Anyone considering this should seek legal and

financial advice.

The capital value of an interest in a property that has been rented out is still

taken into account in the means test by the local authority and for Pension

Credit. Your share of the rental income may also be included in the

assessment of your eligibility for local authority assistance.

However, rental income is ignored for Pension Credit purposes for a property

that you are not occupying as your home. Instead, the value of the property (if

it cannot be disregarded) is treated as producing a ‘deemed income’, which is

also known as ‘tariff’ income.

If a property covered by a deferred payment agreement is rented out, the

rental income may mean that the debt to the authority accrues at a slower

rate than would otherwise have been the case. For more details ask your

local authority, the Pension Service or an advice agency.



9 Giving away your assets

Often someone’s home is their main asset and one that they would like to

pass on to their beneficiaries. It can therefore seem an attractive option to

transfer property out of your name, for example to children or into a trust, so

that you do not to have to use its value to meet care costs.

Caution is advised before taking any such action: the local authority can look

at any such transfer and, if it seems that it was done to obtain assistance

more quickly than would otherwise be the case, may assess you as if you are

still in possession of the transferred property. Similar rules apply to means-

tested benefits.

Local authorities also have the power to consider requiring payments towards

the cost of your accommodation and care from any person to whom you have

transferred a property within 6 months of being placed in a care home, under

section 21 of the Health and Social Services and Social Security

Adjudications Act (HASSASSAA) 1983. This provision is explained in Annex

D of CRAG.

For further information see Age UK’s Factsheet 10, Paying for permanent

residential care, and Age UK’s Factsheet 40, Deprivation of assets.

10 Business assets

As discussed above, the presumption in CRAG is that all of your eligible

capital and income can be considered by the local authority for the residential

care means test.

However, CRAG, also allows a 26 week or longer disregard of the assets of

any business owned (or part-owned) by a new care home resident who has

had to stop self-employed work due to illness or disablement. This is in the

short-term where the intention is to take up work again in the future when the

person is able.



With regard to permanent residents, CRAG gives the local authority

discretion to disregard the capital value of eligible business assets for a

reasonable period of time, providing steps are being taken to realise the

capital value. If no immediate intention to realise the capital value in the

business assets is demonstrated, CRAG advises local authorities to take their

value into account in the means test.

CRAG advises the local authority to obtain information about: the nature of

the business asset; the resident's estimate of the length of time necessary to

realise the asset; the resident's share of assets; a statement of what, if any,

steps have been taken to realise the assets, what these steps were and what

is intended in the near future; and any other relevant evidence, for example

the person's health, receivership, liquidation or an estate agent's confirmation

of placing any property on the market.

11 Local authority powers to collect debts

If you are unwilling to pay your assessed contribution either now or in the

future and own a property whose value is not ignored, the local authority can

create a ‘legal charge’ against the value of the property, under Section 22 of

the Health and Social Services and Social Security Adjudication Act

(HASSASSAA) 1983, and reclaim the money when the property is sold.

The local authority does not need your permission to create a legal charge

under HASSASSAA but should declare in writing that a charge is being

created, and advise or assist you to consult a solicitor.

These provisions should only be used where residents are unwilling to pay

the assessed charge. Where residents are willing to pay but are unable to do

so immediately, deferred payment agreements should be used.

The debt will accrue in the same way as under a deferred payment

agreement. Interest cannot be added to a charge created under

HASSASSAA while the resident is alive but can be from the day after the

resident dies (unlike the deferred payment agreement which allows 56 days

before interest is charged).

If the local authority wants the property to be sold it has to apply to court and

the court will decide whether it is fair to order a sale of the property at that

time, taking into account all the circumstances.



The local authority can delay enforcing its debt until the resident dies or

possibly until anyone else living in the house dies.

The Department of Health’s advice is that where more than one person owns

the same piece of land, the local authority cannot place a charge on the

property. It advises that the local authority register a caution instead. This

means that the local authority will be informed when the house has been

sold. (See section 5 regarding the valuation of jointly owned property.)

12 Paying for yourself

If, following the 12-week disregard, the local authority refuses to enter into a

deferred payment agreement, it is likely that the authority’s contract with the

care home will be ended and you will need to make your own contract.

The Department of Health has said ‘we would not however condone the

practice of advising or recommending residents to obtain a commercial loan’.

Government guidance also says that having capital above the upper limit

does not in itself mean that you should be expected to make your own

arrangements in a care home.

Local authorities must satisfy themselves that you are able to make your own

arrangements or have others who are willing and able to do so for you. If

there is no one in this position, the authority should still make arrangements.

Adults who fund their own residential or non-residential social care have

access to an independent complaints review service provided by the Local

Government Ombudsman.

13 Park/mobile homes

It can be difficult to know whether certain types of property, such as

park/mobile homes (PMH), should be included within the residential care

means test. There is a general presumption in CRAG that all eligible capital

assets should be included alongside eligible income. However, there are

also exceptions in certain circumstances such as for the property disregards

discussed above. CRAG also confirms that personal possessions (chattel)

can’t be included in the means test.



HM Revenue and Customs produces a document entitled SDLTM 10023 –

Mobile Homes, Caravans and Houseboats3. This document provides a useful

summary of how these types of possessions are dealt with in a similar

context and this may also inform their consideration in an adult social care

financial assessment situation. It shows that there is a continuum of

ownership status ranging from that which is clearly a long-term lease to a

license, which is more like rental. Evidential aspects include elements such

the landlord’s right of entry. There may be a number of other complexities in

each case, for example regarding the division of ownership between the

park/mobile home itself and the ground it stands upon. As a result, each case

must be considered individually.

It may be possible to agree a deferred payment on this type of property

where it is someone’s permanent and only home, depending on the

ownership arrangements. The question the local authority must ask is: does

the park/mobile home owner have a beneficial interest in the property and

land which they can be used to secure payment of the future care home

fees? If the answer is no, the only possible type of deferral could be in terms

of a short-term arrangement where efforts are being made to sell the

park/mobile home.

Age UK’s Factsheet 71, Park (mobile) homes, provides more information

including on owner’s organisations that may have expertise regarding the

issue discussed above.

14 Challenging local authority and benefits decisions

If you disagree with a decision about the local authority financial assessment

there is a complaints procedure you can follow. Ask the local authority for

details of its procedure, which it is required to provide. If you are not satisfied

with the outcome of your complaint you can take it to the Local Government

Ombudsman.

For information about the local authority complaints procedure and other

avenues of complaint see Age UK’s Factsheet 59, How to resolve problems

and make a complaint about a local authority.

3 http://www.hmrc.gov.uk/manuals/sdltmanual/sdltm10023.htm

https://testwebmail.ageuk.org.uk/owa/redir.aspx?C=3263aa095e3b477cb6030c3976abee93&URL=http%3a%2f%2fwww.hmrc.gov.uk%2fmanuals%2fsdltmanual%2fsdltm10023.htm



If you disagree with a decision about your entitlement to benefits you can either

ask for a mandatory reconsideration of the decision. If you disagree with the

outcome of a mandatory reconsideration you have the right of appeal to an

independent appeal tribunal. There are strict time limits for challenging a

decision: in most cases, this must be done within one month of the date of

notification. Further information is available in the Department for Work and

Pensions leaflet GL24, If you think our decision is wrong.

A local advice agency may be able to offer advice or help you dispute a social

security or local authority decision.

Action: There may not be a satisfactory solution to your problem. If you feel

the rules are unfair ask your Member of Parliament to raise the issues with

either the Secretary of State for Work and Pensions or the Secretary of State

for Health. Contact Age UK for further information on how to complain about

the local authority.

15 Useful organisations

The Care Quality Commission

The independent regulator of adult health and social care services in

England, whether provided by the NHS, local authorities, private companies

or voluntary organisations. Also protects the rights of people detained under

the Mental Health Act.

Tel: 03000 616 161

Website: www.cqc.org.uk

Citizens Advice Bureau (CAB)

National network of free advice centres including advice about national

housing provision.

Tel: 020 7833 2181 (for contact details only – not telephone advice)

Tel: 08444 70 20 20 (Wales)

Website: www.citizensadvice.org.uk

http://www.citizensadvice.org.uk/



Department of Health

Government department with overall responsibility for social care including

residential care homes.

Tel: 020 7210 4850 (national call rate)

Website: www.gov.uk/government/organisations/department-of-health

Elderly Accommodation Counsel

Provides information on all forms of accommodation, support and care for

older people.

EAC FirstStop Advice, 3rd Floor, 89 Albert Embankment, London, SE1 7TP

Tel: 020 7820 1343

Email: [email protected]

Website: www.housingcare.orgEquality Advisory and Support Service

Equality Advisory and Support Service

A new service, funded by the Government Equality Office, called the Equality

Advisory and Support Service began operation on 1st October 2012. The

new service replaces the helpline run by the Equality and Human Rights

Commission.

FREEPOST Equality Advisory Support Service FPN4431

Tel: 0808 800 0082

Textphone: 0808 800 0084

Website: www.equalityadvisoryservice.com/

Independent Age

A charity that provides free and impartial advice on home care, care homes,

NHS services, housing and other issues advice for older people, their families

and professionals on community care.

6 Avonmore Road, London, W14 8RL

Tel: 0800 319 6789


Website: www.independentage.org

mailto:[email protected]

http://www.housingcare.org/

http://www.equalityadvisoryservice.com/




Pension Service (The)

For details of state pensions‚ including forecasts and how to claim your

pension.

Tel: 0845 60 60 265

Textphone: 0845 60 60 285

State Pension Forecasting Team: 0845 3000 168 (lo-call rate)

Website: www.gov.uk/browse/working/state-pension

Relatives & Residents Association (The)

The Relatives & Residents Association gives advice and support to older

people in care homes, their relatives and friends.

1 The Ivories, 6-18 Northampton Street, London, N1 2HY

Tel: 020 7359 8148


Website: www.relres.org

Veterans UK

Website bringing together services for veterans including advice on pensions,

compensation and welfare services.

Tel: 0808 1914 2 18

Website: www.veterans-uk.info


http://www.veterans-uk.info/



16 Further information from Age UK

Age UK Information Materials

Age UK publishes a large number of free Information Guides and Factsheets

on a range of subjects including money and benefits, health, social care,

consumer issues, end of life, legal, employment and equality issues.

Whether you need information for yourself, a relative or a client our

information guides will help you find the answers you are looking for and

useful organisations who may be able to help. You can order as many copies

of guides as you need and organisations can place bulk orders.

Our factsheets provide detailed information if you are an adviser or you have

a specific problem.

Age UK Advice

Visit the Age UK website, www.ageuk.org.uk, or call Age UK Advice free on

0800 169 65 65 if you would like:

further information about our full range of information products

to order copies of any of our information materials

to request information in large print and audio

expert advice if you cannot find the information you need in this factsheet

contact details for your nearest local Age UK



Age UK

Age UK is the new force combining Age Concern and Help the Aged. We

provide advice and information for people in later life through our,

publications, online or by calling Age UK Advice.

Age UK Advice: 0800 169 65 65

Website: www.ageuk.org.uk

In Wales, contact:

Age Cymru: 0800 022 3444

Website: www.agecymru.org.uk

In Scotland, contact:

Age Scotland: 0845 125 9732

Website: www.agescotland.org.uk

In Northern Ireland, contact:

Age NI: 0808 808 7575

Website: www.ageni.org.uk

Support our work

Age UK is the largest provider of services to older people in the UK after the

NHS. We make a difference to the lives of thousands of older people through

local resources such as our befriending schemes, day centres and lunch

clubs; by distributing free information materials; and taking calls at Age UK

Advice on 0800 169 65 65.

If you would like to support our work by making a donation please call

Supporter Services on 0800 169 87 87 (8.30 am–5.30 pm) or visit

www.ageuk.org.uk/donate

Legal statement

Age UK is a charitable company limited by guarantee and registered in

England and Wales (registered charity number 1128267 and registered

company number 6825798). The registered address is Tavis House, 1-6

Tavistock Square, London, WD1H 9NA. Age UK and its subsidiary

companies and charities form the Age UK Group, dedicated to improving later

life.

http://www.ageuk.org.uk/

http://www.agecymru.org.uk/

http://www.agescotland.org.uk/

http://www.ageni.org.uk/

http://www.ageuk.org.uk/donate



Disclaimer and copyright information

This factsheet has been prepared by Age UK and contains general advice

only which we hope will be of use to you. Nothing in this factsheet should be

construed as the giving of specific advice and it should not be relied on as a

basis for any decision or action. Neither Age UK nor any of its subsidiary

companies or charities accepts any liability arising from its use. We aim to

ensure the information is as up to date and accurate as possible, but please

be warned that certain areas are subject to change from time to time. Please

note that the inclusion of named agencies, websites, companies, products,

services or publications in this factsheet does not constitute a

recommendation or endorsement by Age UK or any of its subsidiary

companies or charities.

Every effort has been made to ensure that the information contained in this

factsheet is correct. However, things do change, so it is always a good idea

to seek expert advice on your personal situation.

© Age UK. All rights reserved.

This factsheet may be reproduced in whole or in part in unaltered form by

local Age UK’s with due acknowledgement to Age UK. No other reproduction

in any form is permitted without written permission from Age UK.

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