Just Group has reported that the over-45s see tapping into the equity in their homes as the most likely source of funds if they need to pay for care in later life but are unlikely to start making financial plans until new rules are introduced.
The firm said the government’s decision to delay the publication of a green paper on social care to the autumn – the latest in a long line of policy postponements – will undermine care planning further as people maintain a “wait and see” stance on care planning.
As it launches its new report – Property and paying for care – Just Group said the evidence is that the over-45s are more willing to face up to tough choices than recent governments with a growing recognition that individuals should be responsible for meeting their own costs in later life and an acceptance of the role of home equity as a source of funding.
“With the number of over-80s set to nearly double in the next 20 years there is a desperate need for clear direction so this latest delay, on top of all the others, is a serious setback,” said Stephen Lowe (pictured), group communications director at Just Group.
“This research shows significant numbers of over 45s see the value tied up in property as part of the solution to care funding so there is a level of pragmatism to build on. Yet we know from previous research that more than half are delaying care planning until the new rules are introduced.”
Over the six years Just Group has carried out its research, the proportion of people saying they expect the state to pay for care has fallen from more than half to less than one-third.
Questioned about how they would pay if they needed to, 33% of over-45s mentioned selling their home. That compares to 31% saying savings, 28% pension and income and 28% who thought the state would pay. 21% said they did not know how they would cover the cost of care.
“Rates of home ownership are highest among pensioners so property equity has the potential to deliver many more billions into the care sector. People are receptive to using property wealth at least up to a limit, with the state stepping in after that.”
The research found 33% agreed that the state should not pay for those who could use value in the home to pay for care, compared to 35% who disagreed and 32% with no opinion.
But where someone has a home worth £500,000 and no other assets, 69% thought care costs should be reclaimed from the house sale after death. That was split 13% who said up to the full value of the home should be reclaimable and 56% saying up to a limited value of which most agreed the limit should be 50% of the home value or less.
“By far the biggest problem is that people don’t know how the system works or what their financial responsibilities are, and they need government to stop delaying these decisions,” said Lowe.
“We need a national conversation about paying for care and part of the debate needs to include the role of incentives in motivating people to making plans earlier in life.”