Paying for care

Carefinancier

I am having a challenge raising money for my Mums care. I am her POA. She has been diagnosed with Altzhimers and had started to find it difficult and lonely to live at home alone. She elected to move to a care home ratber than have a live in carer. She is very happy and fully participating in activities locally with friends and within the home.

The plan has been to sell her house and invest her money to cover the care costs. We have however encountered a number pf challenges:

The house has been on the market since Dec 25 and it is struggling to sell. We have droped the price twice below markst value and recently changed agent.

My Mums saving soon ran out so I approached thr council for assistance. They assess the aituation and refused to help because they felt she should not be in care.

I approached 2 Fin Advisors to see if funds could be drawn out of the property which is worth £600000. This would allow me to withdraw the property from the market for a period until house sales improve. I would rent the property for that period. IFA have looked at Equity release and Bridging loans. It appears Equity Releaae is not posaible and a bridging loan will be difficult.

I appreciate my Mum is elderly and in care but cannot understand why a straight forward buy to let mortgage could not be arranged. The plan is to raise c£120000 to cover care costs for 16 months. This is c 25% LTV. Therefore the risk to a financial provider is very low. My Mum gets c £2000 a month in pension etc and rental is c £1500 net. The financial provider would put a call on the property and if there was a problem they would have little problem getting their money back. What can I do?

On a second point when I do sell the house and invest the money any income extracted will be taxed. I think this is terrible and feel money used directly for care should not be taxed. My Mum will be funding her care for sometime and so is not a burden on the state. It is not right to tax someone who is trying to pay for their care. If tax relief was given in this situation then this would go some way to help with the care crisis.

I would be grateful for your advice.

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elsien

I am wondering whether this might be better off in the mortgages or house buying and selling section of the forum because your query is around how to raise money on the house rather than pension provision and planning?

Also wondering how you are assessing the value of the property because if it’s not selling it clearly isn’t below market value.

MynameisMichaelCane

I would like to comment on your point about tax. I may have to fund my parent's care from my own money, although it will be a struggle for me to do so (financially). We pay so much tax in the UK, so I think there should be some sort of tax relief for payments to care homes. Apparently some other countries give this tax relief. As for paying tax on savings interest, in my view this should scrapped altogether. Or at least, as you suggest, there should be no tax if the savings are used to pay care home fees.

GrubbyGirl_2

You should talk to a solicitor because to refuse to assist Social Services may be in breech of the Human Rights Act (article 8 in particular). They have the ability to fund your mums care and put a charge on her property to be refunded when the property is sold. They should be helping not obstructing. Get some proper legal advice from a specialist solicitor. It won't be cheap but cheaper than what you are suggesting doing

SacredStephan

I suggest you contact Steene Law.

SVaz

An immediate needs care annuity with part of the proceeds may be the answer when the house is sold.

Investing the money, other than in a savings type product or a money market fund is risky, that money will be needed and a big drop could be disastrous.

elsien

https://forums.moneysavingexpert.com/discussion/comment/82029586#Comment_82029586

They are not refusing to assist. What they are saying is that her needs do not meet the level of care that a care home provides, and on that basis they aren’t going to fund it.

They may well agree to fund some care at home but that is not what the OPs mother wants.

Cases that have gone to judicial review have stated that financial constraints can lawfully be taken into account if there are alternative ways of meeting the needs. So for example, loneliness can potentially be addressed by going to day centre sessions, just as an example.
So the challenge mechanism would be to look at the care act needs assessment and query that via the local authority complaints procedure and then the ombudsman. The OP might want to take legal advice as part of that, but they also need to be realistic about the help that their mother needs and a mild dementia diagnosis (depending on how unwell they are ) will not qualify someone for residential care unless there is something more complex going on.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82029545#Comment_82029545

It is best not to get too political in threads as they might get removed, but I think a couple of the points you make need at least some clarification/context.

We pay so much tax in the UK

In a European context our tax burden is about average. A lot less than France & Belgium, but more than eastern European countries. About the same as Germany.

so I think there should be some sort of tax relief for payments to care homes. Apparently some other countries give this tax relief.

I have never heard about tax relief on care costs, sounds like potentially a good idea.

As for paying tax on savings interest, in my view this should scrapped altogether

The UK has one of the most generous tax regimes on savings interest in the world. With ISA's, personal savings allowance and starter savings rate.

Our Irish or German neighbours and many other countries can only dream of such allowances.

Aylesbury_Duck

How have you settled on the house value? Market value is what someone is prepared to pay for it. It sounds like £600k is a significant over-valuation if you've dropped the price below that and still had little interest.

Assuming 100% equity and that the house is probably worth many times more than it was bought for, what's the harm in selling it for £550k, for example? Better £550k you can use than stubbornly valuing bricks at £600k.

Ms_Chocaholic

If your mum's care home costs £2k and your mum receives £1,500 per month in pensions etc, she is only £500 pcm short, is that right? Can she claim Attendance Allowance etc to try and meet the shortfall (only if she qualifies) and can you reduce the price of the house to sell. I assume your mum is paying Council Tax, energy etc, insurance so the sooner you sell the better as you won't have these ongoing costs especially over winter.

GrubbyGirl_2

https://forums.moneysavingexpert.com/discussion/comment/82030882#Comment_82030882

I think that might be an incorrect interpretation. If the cost is only £2000 a month that would be the cheapest care home ever. I've a feeling the deficit is £2k a month