Tenants in Common | How to avoid care home fees

Can I use Tenants in Common to avoid care home fees?

Care home fees in the UK cost on average £1,291 a week if you are paying for your own care. So it is not surprising many have to end up selling their home to fund their care.

However some people want to protect their property from being used for care home fees so they can leave it to the next generation.

If you currently jointly own a property, one way of reducing or avoiding care costs is to change the ownership to Tenants in Common.

But it is important to bear in mind there are certain risks and considerations to take into account if you decide to go down this path.

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What is Tenants in Common?

There are two forms of property ownership in the UK.

Tenants in common

If you own your flat or house as Tenants in Common, this means you each own a share of the property.

• It can be an equal share 50/50
• Or you can own unequal shares. So one person for example owns 20% of the property and the other owns 80%.

When you die you can leave your share of the property to someone else in your will.

Joint Tenants

If you own your flat or house as Joint Tenants, you will both have equal rights to the whole property. If you decide to sell the property you will each have an equal half of the proceeds of the sale. This is regardless of how much you paid towards the mortgage or purchase price.

When you die, the whole property will automatically go to the other owner. This is called right of survivorship. This is regardless of anything you have stated in your will regarding the property.

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How does Tenants in Common avoid care home fees?

Your local authority will carry out a Care Needs Assessment. If it determines that you need residential care, it will carry out a financial assessment to see who should pay for it.

If your assets are above the threshold you will need to pay for your own care. This may involve selling your home.

If you own your house as Tenants in Common, only the share of the person needing care can be included in the financial test.

It is important to remember however that owning as Tenants in Common can sometimes reduce exposure to care home fees, but it is not a foolproof way to avoid them. Councils can challenge arrangements which they see as deliberate avoidance.

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What are the advantages of Tenants in Common?

Part of your home is ring-fenced

A big advantage of Tenants in Common is that when the value of your home is assessed, only the share of the person requiring care will be taken into account in the financial means test. The share of the other person is effectively ringfenced for beneficiaries.

• If one partner goes into care, only their share of the property may be assessed for care home fees, not the whole property.
• The other partner’s share is protected and can remain in the family.

If you are Joint Tenants then the whole house can be used to pay for care.

However it is important to remember that if your partner lives with you in your jointly-owned property it will not be included in the means test.

Protects from debt-collectors

Tenants in Common also protects the other person owning the property from debt collectors and creditors who can only claim the share owned by the person owing the debt.

Home can be inherited

Owners can leave their share to children, relatives, or into a trust, helping to secure inheritance for the next generation.

Their share can be put into a Lifetime Interest Trust so the surviving partner can stay living there. When they die, beneficiaries in the Will can inherit the home.

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What are the disadvantages of Tenants in Common?

It is important to bear in mind that changing ownership of your property to Tenants in Common will only ever protect half of your property from care home fees.

It will protect the half that was owned by the partner who has died.

When one dies, their half is then owned by a Trust.

The other half will still be seen as an asset by the local authority if the second partner has to go into a care home.

Not guaranteed to avoid care home fees

The local authorities will look at the property arrangements and if they decide they were a deliberate deprivation of assets (set up mainly to avoid care costs), they will include the property as an asset in the calculations.

A complex will is needed

If setting up a Tenants in Common, this usually needs to be done in conjunction with legal arrangements specified in a Will such as an Life Interest Trust.

Survivor is unable to use the house to pay for care

The survivor will have to live in a care home that is chosen and paid for by their local authority which means they won’t have much choice when choosing a care home.

Family disputes

If the surviving partner wants to sell the house or move, they will have to consult the beneficiaries. This may cause disagreements.

Inheritance Tax (IHT)

Another important thing to look at is if Tenants in Common will affect Inheritance Tax. You will need to consult a solicitor and get professional advice.

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What are the savings and assets thresholds in the UK for 2025/26?

This is how much money you can have before you have to pay care home fees.

Country	Lower Capital Limit	Upper Capital Limit
England	£14,250	£23,250
Scotland	£21,500	£35,000
Wales	–	£50,000
N Ireland	£14,250	£23,250

What is a Life Interest Trust?

If you are Tenants in Common you can help protect the share of the remaining partner living in the house by putting it into a Life Interest Trust.

Be careful if you decide to change the ownership of your house from Joint Tenants to Tenants in Common. Or if you set up a Life Interest Trust. Any changes must be done years in advance. Otherwise you may be accused by the local authority of deliberate deprivation of assets.

If a local authority suspects there is a deliberate deprivation of assets they will carry out an investigation and the property can be included after all as an asset when determining who pays care home fees.

A Life Interest Trust enables someone to continue living in the property until they die. But on their death it can be inherited by a third party.

To set up a Life Interest Trust you must own the house as Tenants in Common

For example, one partner in a couple dies and leaves their share of the house to the surviving partner and the first partner has children from a former relationship. The second partner continues to live in the house until they die and the property is then inherited by the first partner’s children. The second partner is unable to leave the property to anyone in their will.

The surviving partner can sell the property and buy another property. As long as the share of the first partner is kept intact.

The share of the property from the first partner who has died will be protected from being used for care home fees by the surviving partner.

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How do you change ownership to Tenants in Common?

If you own your property as Joint Tenants, you can change to Tenants in Common by embarking on a process called ‘severance of joint tenancy’.

These are the steps you need to take:

Serve a Notice of Severance

• One co-owner serves a written notice to the other saying they want to sever the joint tenancy.
• You don’t need consent to do this. One owner can do it unilaterally.
• However the notice should be dated and ideally acknowledged by the other party.

Register the change in ownership structure with the Land Registry

• Complete Form SEV (if the property is registered).
• Send it to HM Land Registry with the notice of severance.
• This updates the title register to show the property is now held as Tenants in Common.

Update Wills

Once you have become Tenants in Common, each person should update their will to say what happens to their share (Such as leave it to children, into trust).

Consider a Declaration of Trust (optional)

• If the ownership shares are not equal (70/30 instead of 50/50), you can set this out formally in a Declaration of Trust.

If you are considering changing to Tenants in Common

If you are thinking of changing the ownership structure of your property to Tenants in Common so you can avoid or reduce your care home fees, do consult a solicitor or financial adviser. They will be able to ensure you are complying legally and doing the right thing for you and your family.