It is well known that, over the last ten years or so, it has been increasingly difficult for young people to get on the housing ladder. Even for those coming out of university with a good degree, there is often little option but to go back home and live with parents. Increasingly, for whatever reason, parents share not just occupation of the family home but also ownership. What happens when a parent goes into care? To what extent is the child’s occupation at risk?
In order to give some perspective, we need to remember that, in some circumstances, there is not a problem at all. For instance, where one parent and a child reside in the property with the other parent in care, the property is exempt from being used for care fees. Likewise, if the child is aged 60 or over. But what if a child owns the property with just one parent and the parent needs full time care? Or where two siblings own jointly, and one goes into care?
The problem can come when the local authority undertakes a financial assessment. Very often it will enquire about the value of the property, divide it into two and say that the resultant figure is available to the care home resident and should be used towards the care home fees. But is this correct?
The starting off point is to say that, when assessing a person’s capital- e.g. savings and property- it is the market value which is relevant. In a lot of cases this is easy. For example, one can just look at a statement to see how much is in a bank account. If the resident owns a property and no one else is living there, an estate agent can give a valuation.
But it isn’t quite as simple where a property is jointly owned. Here, the council should undertake a market valuation of the parent’s half share. In other words, what would a third person be willing to pay for that share? Bearing in mind that any buyer would have to share possession with the adult child, the answer may well be “not much”. Or, could the parent be successful in forcing a sale to obtain his/her money? Answer- it is hard to see how anyone, including the council, could be so sure that a court would order a sale, so it is difficult to see how the council could use this as a basis for valuing the parent’s share.
Accordingly, it will very often be the case that the market value of the half share will be far less than one half of the whole. If there are any difficulties with a council, a valuation can be obtained from a suitably qualified and instructed valuer. Just two cases I have been involved in will illustrate the point. In one, a property worth £230,000 was owned by a lady and her daughter in equal shares. The lady was in care and her share valued at £36,000. In a similar situation, a 60% share of a property worth £150,000 was valued at £15,000. A half is not always a half.
Consultant at Higgs & Sons
Philip Martin-Summers is a consultant with Black Country firm Higgs and Sons, which is widely respected both nationally and locally for its expertise in serving the needs of both private and commercial clients for over 140 years. Philip specialises in advising individuals and their families on a wide range of matters relating to care and care funding issues.