Annex - potential issues for care?

[NotMeekNotObedient]

Hi can anyone assist with some annex questions please?

We have been trying to move my Dad (72, in fairly good health) closer to where we live (town) but the bungalow he's trying to buy has fallen through ough again.

Looking for alternative options, we have seen a 4 bed house with an annex (linked but classed as a separate ate dewelling for council tax, could be joined at a later date) in a local village.

DH, DD toddler and I will need to move in around 6 years for school catchments (20mins away likely). Village house would be in catchment. As it stands we would struggle to upgrade from our 2 bed to a 4 bed, in 6 years we could get a small 3 bed.

On paper it seems the village house with the annex could be a great solution for us all. I am an only child so all care will fall to me whether Dad is 5 or 20mins away. We all get on well. I am in the will to get everything.

Dad would pay 350k for a bungalow and the same for a share of the annex house (50/50 joint tennants?). DH & I would need a mortgage of £100k - we will need to speak to broker as to porting our mortgage fix.

My concerns are:

When Dad needs a care home, will this be seen as deprivation of assets? Would we be forced to sell the property? We wouldn't be able to buy his half I don't think.

If living with us would Dad be classed as a dependent, thus effecting ability to borrow mortgage amount?

If Dad needed carers visiting daily, would we have to self fund? Because he technically lives with an able adult?

I am happy to do some care but not all, my daughter and husband need me too. We couldn't afford to pay masses of care costs.

He is lonely since mum passed and wants to see more of DD, hence the move. I have no problem in theory of using the cost of his home towards care fees but not if we then need to sell to pay these.

And I don't want to deprive him of social care options (and have to do it all myself) for the sake of a bigger house for us.

Any advice would be very much appreciated.

Get financial advice... there could be a number of options here. Firstly he could gift you the money. It would be free of inheritance tax as long as he survives for 7 years. The house wouldn't be taken into account when looking at date home fees, he could write the house into trust ad well, or put a trust into his will.
The issue with these things is that if he does need care and you want a decent place, does he have enough liquid cash to pay for it? Or would you be caring for him at home and struggling/ putting him into a second rate home while you live in your nice 4 bed home?
Care needs to be paid for and deliberate deprivation rules aside, it's not reasonable to expect the taxpayer to cover this for you

Age UK have a huge number of information sheets and also a helpline, which is in fact, very helpful.

I'm not sure the 7yr thing applies to care home fees, I think it's become conflated with inheritance tax laws. Double check this before you do anything.

Thank you for the replies, much appreciated.

For clarity I completely agree a person's assets should fund their care, but if the council pursuing it meant we would need to sell I don't think this would be a good option for the whole family.

This is more about meeting the needs of my Dad and us now. There is an element of keeping Dad out of a care home as long possible, not to avoid fees, but because my husband works in the sector and has seen some terrible treatment/environments. That said he's seen some great examples too and with dementia care it is often the best option for all.

I don't think the 7 year thing applies.

The agent assures us that we wouldn't be forced to sell Dad's share but I'm not sure I trust this. We would obviously discuss with a solicitor before going further, I just just don't want to do that if I can establish it's a no-go before hand.

It's also the access to visiting carers while living in the the annex. If in his own bungalow he would get these under social care (house not taken into calculations I think?) but in an annex I'm not sure if this changes things? We may not be able to self fund the amount he needs and that would be unfair on him.

Thank you @AudiobookListener I will call age UK.

It's looks like a bungalow separately is probably the best option, which is sad as I'd happily help him and save carers coming where I reasonably could. I feel the UK always get slated for not looking after our aging parents but it's really complicated to do in practice. Maybe a blessing in discuise reading some of the other annex posts!

My DH's dream of a garage is sadly I think going to stay that way!

Deprivation of assets wouldn’t apply if the money was clearly spent for his benefit. So purchasing the annex to live in would probably be ok, purchasing a house where your family occupy the major part, not. You might find it hard to justify a 50:50 split. Take financial/legal advice.

If he moves into a care/nursing home, his share of the house would be assessed as being available to him to fund his care. You may be able to get a charge put on the house (so you don’t pay until you sell the house anyway) or you may be able to rent out the annex to top up any other money your father has to put to care home fees. At current prices you’re looking at £50k a year (maybe more), against which you can set his savings, his pension, and Attendance Allowance as long as he is a complete self funder.

Not everyone needs a care home. At the moment it’s supposedly 1 in 3, but as medical care for heart disease and cancer improves, that’s likely to increase.

It's also the access to visiting carers while living in the the annex. If in his own bungalow he would get these under social care (house not taken into calculations I think?) The annex shouldn’t change that.

I'd be very careful, finances aside (and do get professional advice about those).

I grew up as a child in a similar situation to this and hated it. My grandparent needed more and more support with shopping, cooking, washing etc which severely curtailed family life for everyone else - eg couldn't go too far away on holiday in case we needed to come back in an emergency. All family events focussed on needs of elderly person instead of child. It sounds selfish, but that's really not great when you're the child and it's your birthday or Christmas or day out being ruined or cut short again! It could be fine for a while but how will it work when their needs ramp up, or when you need your own time to yourself or to deal with a younger family issue? They can reach a point where, no matter how much care or companionship you provide, it isn't enough.

Also consider the costs when/if they do end up going into a home or eventually pass away. You then have two homes to maintain, pay council tax on and utilities (even just standing charges add up and there often isn't an empty home council tax exemption now). Whereas if he has a separate bungalow it can be sold or rented out, which would be difficult for an annexe.

Double check for covenants on the annexe too - sometimes they're limited to being occupied by family members only so you wouldn't be able to rent it out or AirBnB it if he went into a home but you'd still have to maintain it.

Other than that is it totally separate so if you did need to rent it out you wouldn't end up with tenants having access to your garden or parking etc?

If your dad is in good health and you are doing this for social reasons (becuase he is lonely and wants to be near you) I don't see the problem.

Does he have carers now? Any problems with mobility or memory?

You sound caring and that you will be there regardless if your dad needs help. Having been in that situation I would say the thing that made it really hard was that I lived 25 minutes away - so even a short visit took an hour of travel. It is a very different pressure on only children.

The vast majority of older people don't end up in care homes (neither my parents or my dh's grandparents did - his parents are too young still!!).

What is your dad's income like? Is it just state pension or does ge have his own provision too.

I have to say that i think a decent sized annex would have been amazing . Your dad is only early 70's. He could well have another decade or more before any issues crop up.

Be careful. Definitely get legal advice regarding the possibility that he has to go into residential care. Could the local authority make you sell the whole property if you can't buy him out?

It wouldn't be deprivation as he would still have the asset of 50% of new property. It would only be deprivation if you put it only in yours and DHs name. However his 50% share of the property would be considered an asset which needs to fund care fees if he goes into a care home. Unless you or DH are 60 or over when this happens. In which case the property would be disregarded. The LA would put a charge on the property and the money would be owed back when the deferred payment terminates. How much would due to be repaid would depend on how long he was in care and how much equity was in his 50%. If it was far enough in the future and property prices rise you may be able to remortgage and not sale the property to pay the debt but it is a risk.