Property overtakes the state as realistic source of LTC funding

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Selling property has become the most realistic source of funding for long-term care this year, overtaking the state and savings, Partnership has reported.

There has been a jump from 31% of people selling their home to help funding to 40% from 2012 to 2013.

Partnership's Care Index shows property is now the most likely means of funding care.

In 2012, 52% of people - the highest percentage - looked to the state to pay for some or all care; this number has dropped to 37% this year.

Pension income was the next likely source of funding for 45% last year, followed by 35% using savings. These numbers have also fallen to 35% and 29% respectively.

A further 9% this year said they would rent their property to give an on-going income compared to 10% in 2012.

Chris Horlick, managing director of care at Partnership, said: "Last year, we anticipated that property was likely to become a key source of funding for care. As the debate around the reform of social care funding in England has grown so too has the speed of change in attitude, as people's belief in the State is replaced by reliance on their own means."

"It is believed that people over the age of 65 have £753bn of un-mortgaged equity in their property. Accordingly property is an important source of value for people in retirement who are asset rich but income poor."

He added equity release could also provide another "valuable mechanism" to enable people to cover care fees.

Horlick said regulated financial advice was critical for people who are currently paying some or all care costs and plan to use their property for funding.

Tim Anstee, partner of adviser firm The Wealthcare partnership, said: "There is a much greater understanding now of property values in that people are much more aware of getting the current value, as opposed to thinking it should be more when comparing to the market before the crash. So people are a lot more open to selling their property for current values.

"We have definitely seen a shift in this understanding in the last year among our clients looking to fund long-term care. It is important because if you are going into care it is probably the last property you are going to own and naturally you want the maximum amount from the sale."

Partnership's Care Index compares attitudes towards the cost of long-term care across the UK year on year.

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