Homeowners care home costs are set to get worse before new cap

  • Post last modified:March 26, 2024
  • Reading time:6 mins read

Britain is in the midst of a social care crisis, thanks to successive Conservative Party governments. Staff shortages, increasing energy prices, and the cost of living crisis are squeezing care services in the UK. This impact is to be felt by older homeowners and their adult children, with new analysis showing that care home costs are going to suck up even more of people’s property value.

Homeowners care home costs: out of control

The average care home cost in the UK is £1,160 per week, working out at around £60,320 a year and for nursing homes, the cost is even more, with average costs sitting around £1,410 a week or £73,320 per year.

With a typical stay in care home for over 75s being approximately four years according to census data, an average care home stay could cost Brits as much as £240,000-£290,000.

The government has plans to implement a social care cap of £86,000. It originally said it would introduce this in October 2023. However, the government then pushed this back to October 2025. Moreover, the cap is misleading. As financial institution St James’s Place wrote:

the reality is that some people will still have to pay much more than £86,000 towards their care…

The care cap only applies to money you spend on personal care. That’s help with daily activities such as washing, feeding, medications, getting dressed and so on. This includes care at home, or in a residential care home.

The costs of a room in a care home, and the bills for food, cleaning and heating, don’t count towards the cap. These so-called ‘hotel costs’ account for a sizeable portion of a care home bill.

So only some of your care home costs will ever count towards your social care cap.

As a result, homeowners care home costs could still be huge when the cap come in – and even more so in the meantime.

Not prepared for the financial shock

An estimated one third of care home residents are self-funded. People are typically funding their care home costs through their own estate or assets, with many using money from their homes to fund their care.

However, with the average price of a home in the UK currently sitting at £268,700 for a semi-detached house, and £445,100 for a detached house, homeowners stand to lose as much as 89% of the capital in their home to pay for their care – leaving millennials with very little to inherit after this has been paid for.

While this figure is alarming, many will not even be prepared for the impact of this cost. Findings from Taking Care Personal Alarms reveal that half of adults in the UK haven’t talked to their parents about their later life care plans.

Lauren Frake, a care expert from Taking Care has revealed how care home costs will eat into millennials inheritance – and what families can do to mitigate this:

Despite reports that suggest Millennials are on course to become the “richest generation in history” due to cash-rich Boomer parents, this isn’t necessarily the case, with unplanned-for care costs likely to make a significant dent in inheritance.

Our estimations show that a typical stay in a care home can cost as much as £60,000 a year, or even more for individuals with complex care needs like dementia, and millennials will no doubt need to factor in these types of costs when looking at what they may inherit from their parents.

#HaveTheTalk about homeowners care home costs

Frake continued:

Care plans are a crucial step in planning for the future, yet our research shows that many families in the UK simply aren’t preparing for this by avoiding having conversations about care needs with their older parents.

By not talking about what future care will look like for their parents, UK families are also keeping themselves unaware of the realities of care costs – meaning that when the time comes to start paying these costs, they’ll be a big shock to budgets and financial planning.

Whilst care homes provide an essential solution to the care needs of older people across the UK, there are preventative steps that can be taken to keep older people living safely at home for longer – such as assistive technology and in-home carers. However, these preventative measures can’t be implemented if people simply won’t have open conversations about it.

So, Taking Care has launched a campaign around this. Frake said:

Our #HaveTheTalk campaign encourages people to speak with relatives sooner about their future care and support wishes to help them better prepared for the future. By having conversations about care earlier, people can properly plan both financially and logistically for whatever the future might hold.

You can find out more about Taking Care’s #HaveTheTalk campaign here.

Featured image via tommyandone – Envato Elements

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