20 March 2017

Half the value of your home at risk from average care home stay

5 min read

 
Steve Webb - Director of Policy

Steve Webb

Director of Policy, Royal London

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New analysis by Royal London shows that the typical person entering residential care will face total bills of between £50,000 and £93,000 depending on where they live.

Variations in house prices around the UK mean that this could amount to anything from 18% to 56% of the value of the average house. For residents in the North East of England, where the average house price is just under £129,000, an average stay of thirty months in a residential home costing £554 per week would eat up 56% of the value of their home. By contrast, for those living in London where the average house price is around £484,000, thirty months of average residential care costs of £666 per week would only account for around 18% of the value of that property. For most people in later life, their family home is likely to be by far the largest asset on which they will need to draw to meet care costs.

The length of time for which someone stays in a residential home can vary widely, and for those with the longest stays, the total bill can exceed the value of the typical house in several parts of the UK. Based on academic evidence which shows that 10% of residential home residents have a stay of 6.5 years or more, for residents of Wales, Northern Ireland and four English regions (North West, North East, Yorkshire and East Midlands) such long-stayers could face a total bill in excess of the value of the average home.

Full results for Scotland, Wales, Northern Ireland and each English region for average stays in residential care homes are provided in the table:

Residential care costs
  House Price  Weekly Total(130 weeks)

Total cost as %
of house price

Wales £148,177 £548 £71,303  48.1% 
Scotland * £141,553 £385 £50,050 35.4%
N Ireland £125,480 £512 £66,614 53.1%
North West £152,259 £500 £64,959 42.7%
North East £128,631 £554 £71,993 56.0%
East Midlands £176,790 £557 £72,406 41.0%

London

£483,803 £666 £86,612 17.9%
South East £316,026 £710 £92,266 29.2%
Yorkshire £154,985 £544 £70,751 45.7%
East of England £281,513 £699 £90,887 32.3%
South West £242,808 £613 £79,716 32.8%
West Midlands £181,328 £561 £72,958 40.2%

*In Scotland, the Scottish government will meet the part of care home bills relating to social care, and so the proportion of the value of a typical home taken up will be lower than in the rest of the UK. The figure shown here is net of the social care contribution from the Scottish government.

Commenting, Debbie Kennedy, Head of Protection at Royal London said:

These figures are a shocking reminder of the huge costs which growing numbers of us will face if we need residential care later in life. Even an average stay in a care home can eat up half the value of your home, depending where you live in the country. The whole system is a lottery and we need to find better ways of supporting people to cope with these large and unpredictable bills."

Steve Webb, Director of Policy at Royal London said:

Successive governments have failed to grasp the nettle when it comes to care costs. For over twenty years we have had a series of Royal Commissions, expert reports and policy papers, but little has changed. With an ageing population, more and more of us will have loved ones needing long-term care, and we could see a large part of the value of our family home taken up in care costs. The government’s plans for yet another discussion document on social care later this year are far too slow. We need urgent action to address this funding challenge."

- ENDS- 

For further information please contact:

Steve Webb, Director of Policy, Royal London

Notes to editors:

  1. All figures are for residential care rather than nursing care. For those who need nursing care the total bill is likely to be smaller. This is because average stays in nursing homes are significantly shorter than average stays in residential care, and this more than offsets the higher weekly cost of nursing care.
  2. Sources: Royal London calculations based on:
    1. Monthly care home fees from LaingBuisson analysis for 2014/15, updated by uniform 3% pa to 2016/17;
    2. Average house price data from ONS as at December 2016 https://www.gov.uk/government/publications/uk-house-price-index-summary-december-2016/uk-house-price-index-summary-december-2016;
    3. Data on long-stayers from “Length of Stay in Care Homes”, Julien Forder and Jose-Luis Fernandez,PSSRU Discussion Paper 2769 Jan 2011, www.pssru.ac.uk.

About Royal London:

Royal London is the largest mutual life, pensions and investment company in the UK, with funds under management of £117 billion, 8.8 million policies in force and 3,745 employees. Figures quoted are as at 30 June 2018.