You can rent out your property and use all or part of the rental income to fund your care fees. This can be a good option if:
- your family is keen to keep the property, or
- if a quick sale would make it difficult to realise the property’s full value.
In some cases, renting out your property may cover the full cost of your care. In others, it can at least contribute towards it.
Once you have this rental income to go towards paying for care, you can top it up using:
- pensions, and
- other sources of income or realisable assets.
If you’re renting out your property, you should allow for ‘void’ periods – when the property is empty. Make sure you allow for this when you’re calculating how much income you’ll generate from renting the property out. You should also factor in ongoing costs such as redecorating, replacements and repairs. You’ll also need to set aside money for your increased tax bill as rental income is taxable.
Advantages of letting your property
- It can deliver a continuous stream of income for an infinite period. This can eliminate any worry about running out of funds to pay for care fees.
- It keeps your property in your estate – and your home remains occupied.
- Your tenants will pay utility bills and council tax for the property.
- You’ll benefit from any potential increases in the property’s value.
- It can prevent the need to sell your home when house prices are falling.
- Letting your property can help your family to keep the property.
Disadvantages of letting your property
- There may be periods where you have no tenants – therefore no rental income.
- You could experience maintenance and/or tenant issues such as:
o unpaid rent
o redecorating costs
o costs for repairs, and/ or
o costs for replacing fixtures, fittings and furniture.
- Being a landlord comes with responsibilities. You may not be able to meet these while you’re living in a care home. If you can’t, you’ll have to appoint someone to fulfil your landlord duties. This includes making sure the property meets the latest regulatory standards.
- If you manage the property yourself, renting it out can be time-consuming and stressful. You can use a letting agent, but this would come with additional costs.
- The rent may not be sufficient to cover your care fees – and your other costs.
- Renting out a property could mean you are liable for Capital Gains Tax when it is sold.
- The rental income you receive for the property might:
o push you over the limits for local authority help
o push you into a higher income tax bracket, or
o affect your other benefits.
- Your care home costs may rise faster than the rental income you get.
Getting help to rent your property
A professional agent can manage the property rental process for you.
If you do hire an agent, look for one registered with ARLA Propertymark. Their members have to meet higher standards than the current legislation.
A good property agent will:
- know the right rental level to set
- advise on what modifications are needed
- vet tenants for you
- manage rental payments, and
- organise ongoing repairs on your property.
It’s also worth getting advice from an experienced and qualified care fees adviser before deciding to rent your property out.
They’ll look at your finances with you and plan how you can cover your care fees. They know how the care system works and the sources of care fee funding you could be entitled to. You can use our care fees adviser directory to find a financial adviser local to you.