Brits Could Lose Inheritance, Family Home Just To Pay 'Catastrophic' Council Care Cost

UK families risk losing their inheritances due to rising care costs, with councils currently owed around £343 million in unpaid fees.

The total debt from care costs has surged by over 40 per cent since 2020, as care home fees now average £64,000 per year. Many families are forced to use their properties as security or sacrifice inheritances to cover the growing financial strain of long-term care.

Rising Care Costs, Shrinking Inheritances

English councils have claimed £343 million in care home fees using deferred payment agreements. NHS data shows that local authorities plan to recover these considerable amounts from the sale of care home residents' properties after their deaths.

A recent study by Lottie.org, a resource that simplifies the search for top UK care homes and retirement communities, revealed that 74 percent of UK families struggled to afford care for older relatives in 2024, illustrating the growing financial pressure on families.

Essex County Council currently possesses the highest debt of any local authority, totalling nearly £16 million, followed by Lancashire County Council with almost £14 million. The increase in council claims follows Labour's cancellation of a Conservative-planned limit on care expenses, which had pledged to guarantee that no one would have to sell their home to pay for care.

Deferred Payment Agreements: A Lifeline Or A Liability?

Across England, 6,815 Deferred Payment Agreements (DPAs) are currently in place, enabling homeowners to use their properties as collateral to borrow from councils for care expenses. Last year, 3,205 families signed new DPAs, a 35% rise from the previous year.

During 2023-24, councils recouped £90 million from 2,295 families, averaging nearly £40,000 in debt per family. Some local authorities also apply interest to these agreements, with rates currently limited to 4.25 percent as of January 2025.

Weekly care home fees have reached alarming heights, with nursing care for dementia patients costing as much as £1,510 per week for those in permanent residence. Lottie's data indicates that even basic residential care now costs £1,156 weekly for permanent residents.

Residential care with dementia support costs £1,318 per week for permanent residents, while nursing care without dementia is £1,457. Respite care is even pricier, reaching £1,640 weekly for nursing and dementia care.

Families Struggle To Pay For Elderly Care

Basic residential respite care costs £1,337 per week, and residential care with dementia support costs £1,413. Mike Padgham, of care provider Saint Cecilias Care Group, points out that councils progressively encourage families to use DPAs.

'Councils are cash-strapped and doing everything they can to avoid paying for care. So they are trying to encourage people to go to them and use a deferred payment agreement rather than go to a private provider,' Padgham said.

These agreements are causing more disagreements between councils and families, with Padgham anticipating that such conflicts will 'only increase' as many families face care expenses. 'We're still in the situation where people are selling their homes to pay for catastrophic care costs,' he added.

In England, individuals with assets over £23,250 are not eligible for government assistance, making Deferred Payment Agreements with local councils a possible way to pay for care. 'DPAs can provide vital financial flexibility for those entering residential care,' said Jane Townson of the Homecare Association.

Families In Crisis: Struggling To Afford Care

'Families frequently report delays, inconsistent eligibility criteria, and a lack of transparency about costs and repayment terms. These challenges can create unnecessary stress for people at a difficult time in their lives,' Townson continued.

The Government has established an independent commission to overhaul adult care. However, according to a press release from the Department of Health and Social Care's Stephen Kinnock MP and The Rt Hon Wes Streeting MP, a final report isn't anticipated until 2028. Campaigners have criticised successive Governments for neglecting to fund the sector properly.

A spokesperson for the Local Government Association defended Deferred Payment Agreements as a valuable means of handling care expenses. The spokesperson stated that DPAs help families control costs without requiring the immediate sale of their homes, adding that councils are dedicated to 'offering this option sensitively and in discussion with individuals and their families.'

'While councils are keen to support people, they also have a responsibility to ensure public funds are managed effectively and that costs can be recouped, and DPAs are a valuable tool in balancing these needs,' the spokesperson added.

Some care providers have cautioned they are at risk of failing due to the Government's National Insurance increase, which is driving up staff costs.