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

Transcription

1 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 of 28

2 Inside this factsheet 1 Recent developments 3 2 Property and the local authority means test Valuation of property 5 3 Property that is not included Discretion to disregard The 12 week property disregard Moving from a disregarded property 8 4 Ownership of property 9 5 Valuation of jointly owned property The statutory scheme The trust purpose A prompt and independent property valuation CRAG - statutory guidance 13 6 Pension Credit and property Pension Credit and jointly owned property 15 7 Deferred payment agreements Deferred payments and self top-ups 17 8 Renting out your property 18 9 Giving away your assets Business assets Local authority powers to collect debts Paying for yourself Park/mobile homes Challenging local authority and benefits decisions Useful organisations Further information from Age UK 26 Factsheet 38 April of 28

3 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 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 The Care Bill will replace existing social care legislation and becomes operational in April The Dilnot-related funding reform elements of the Bill are presently planned for introduction in April 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 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. Factsheet 38 April of 28

4 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: /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. Factsheet 38 April of 28

5 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. Factsheet 38 April of 28

6 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 31 st January 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 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 Factsheet 38 April of 28

7 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. Factsheet 38 April of 28

8 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 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. Factsheet 38 April of 28

9 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. Factsheet 38 April of 28

10 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. Factsheet 38 April of 28

11 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 , 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. Factsheet 38 April of 28

12 There are two leading cases that provide guidance on this point for the purposes of residential care charging. In the case of Wilkinson v CAO 1 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 Palfrey 2. 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 Factsheet 38 April of 28

13 20. Paragraphs to 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 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; Factsheet 38 April of 28

14 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. Factsheet 38 April of 28

15 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. Factsheet 38 April of 28

16 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 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. Factsheet 38 April of 28

17 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. Factsheet 38 April of 28

18 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. Factsheet 38 April of 28

19 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 meanstested 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) 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. Factsheet 38 April of 28

20 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. Factsheet 38 April of 28

21 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. Factsheet 38 April of 28

22 HM Revenue and Customs produces a document entitled SDLTM Mobile Homes, Caravans and Houseboats 3. 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 Factsheet 38 April of 28

23 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: Website: Citizens Advice Bureau (CAB) National network of free advice centres including advice about national housing provision. Tel: (for contact details only not telephone advice) Tel: (Wales) Website: Factsheet 38 April of 28

24 Department of Health Government department with overall responsibility for social care including residential care homes. Tel: (national call rate) Website: 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: Website: 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 The new service replaces the helpline run by the Equality and Human Rights Commission. FREEPOST Equality Advisory Support Service FPN4431 Tel: Textphone: Website: 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: charity@independentage.org Website: Factsheet 38 April of 28

25 Pension Service (The) For details of state pensions including forecasts and how to claim your pension. Tel: Textphone: State Pension Forecasting Team: (lo-call rate) Website: 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: info@relres.org Website: Veterans UK Website bringing together services for veterans including advice on pensions, compensation and welfare services. Tel: Website: Factsheet 38 April of 28

26 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, or call Age UK Advice free on 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 Factsheet 38 April of 28

27 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: Website: In Wales, contact: Age Cymru: Website: In Scotland, contact: Age Scotland: Website: In Northern Ireland, contact: Age NI: Website: 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 If you would like to support our work by making a donation please call Supporter Services on (8.30 am 5.30 pm) or visit Legal statement Age UK is a charitable company limited by guarantee and registered in England and Wales (registered charity number and registered company number ). 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. Factsheet 38 April of 28

28 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. Factsheet 38 April of 28