FS38 Treatment of Property in The Means-Test For Permanent Care Home Provision Fcs

Factsheet 38  April 2014
Treatment of property in the means test for

permanent care home provision
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.
Factsheet 38  April 2014 1 of 28

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

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.

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

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

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: info@firststopadvice.org.uk
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
Email: charity@independentage.org
Website: www.independentage.org

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
Email: info@relres.org
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

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.

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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Factsheet 38  April 2014

Treatment of property in the means test for

Factsheet 38  April 2014 1 of 28

Factsheet 38  April 2014 2 of 28

Definitions of terms used in the text

Factsheet 38  April 2014 3 of 28

2 Property and the local authority means test

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

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

Factsheet 38  April 2014 4 of 28

2.1 Valuation of property

3 Property that is not included

Factsheet 38  April 2014 5 of 28

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

Factsheet 38  April 2014 6 of 28

3.1 Discretion to disregard

3.2 The 12 week property disregard

Factsheet 38  April 2014 7 of 28

3.3 Moving from a disregarded property

Factsheet 38  April 2014 8 of 28

5 Valuation of jointly owned property

Factsheet 38  April 2014 9 of 28

5.1 The statutory scheme

Factsheet 38  April 2014 10 of 28

5.2 The trust purpose

Factsheet 38  April 2014 11 of 28

5.3 A prompt and independent property valuation

1 [2000] EWCA civ 88

Factsheet 38  April 2014 12 of 28

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

5.4 CRAG - statutory guidance

Factsheet 38  April 2014 13 of 28

 any willing buyer would be able to force a sale.

6 Pension Credit and property

Factsheet 38  April 2014 14 of 28

7 Deferred payment agreements

Factsheet 38  April 2014 15 of 28

Factsheet 38  April 2014 16 of 28

7.1 Deferred payments and self top-ups

Factsheet 38  April 2014 17 of 28

8 Renting out your property

Factsheet 38  April 2014 18 of 28

Factsheet 38  April 2014 19 of 28

11 Local authority powers to collect debts

Factsheet 38  April 2014 20 of 28

12 Paying for yourself

Factsheet 38  April 2014 21 of 28

14 Challenging local authority and benefits

Factsheet 38  April 2014 22 of 28

Citizens Advice Bureau (CAB)

Factsheet 38  April 2014 23 of 28

Elderly Accommodation Counsel

Equality Advisory and Support Service

Factsheet 38  April 2014 24 of 28

Relatives & Residents Association (The)

Factsheet 38  April 2014 25 of 28

 to order copies of any of our information materials

 to request information in large print and audio