Care home place costs double the average pensioner's income - A place in a care home now costs up to £30,000 a year, almost twice the average pensioner's income, according to new figures.
A “clear gulf” in funding for services for the elderly has opened up, forcing individuals to sell their homes and raid savings to top up their incomes in order to meet the costs of long-term care, analysts warned.
Research from the leading care agency, Prestige Nursing + Care, suggested that Britain faces a “huge crisis” as people live longer, while councils cut back on state-funded places in residential homes.
An estimated 20,000 people are forced to sell their homes to pay for long-term care every year. A panel of experts, led by the economist, Andrew Dilnot, will recommend reforms to the funding of care and support for elderly and disabled adults in a report to ministers next month.
International projections suggest that the UK will be forced to spend an extra £50 billion a year on services for elderly people as the population ages over the next four decades.
Researchers commissioned by Prestige Nursing + Care found that the cost of a typical care home place already far outstrips the average pensioner’s income.
A single room in a private residential home in Britain now costs an average of £25,953 a year, but a typical single pensioner is on an annual income of just £13,998, the research found. This leaves a shortfall of £11,965 a year.
In London, the most expensive region in the country, average care home costs were £30,784 a year, while in the South-East, annual fees typically reached £29,827.
Jonathan Bruce, Managing Director of Prestige Nursing + Care, said most people did not plan for the expense of paying for care and could find themselves suddenly saddled with huge bills when they or their relatives needed support.
“It is very distressing for families,” he said. “Mum or Dad breaks their hip and goes into hospital, they need rehab when they come out, and often families haven’t really thought about it.
“With 87% of people approaching old age without having made any financial provision for the cost of care, we face a significant crisis.”
Industry experts believe care homes are being forced to increase the charges to private residents who do not qualify for state support because councils have cut the fees they are willing to pay for publicly-funded residents.
Mr Bruce said: “Government funding cuts are having a direct impact on local authority care budgets so those who rely on state care may find that the rug has been pulled from under their feet.”
The cheapest care home places were in Wales, where average fees were £17,680 per year, only £3,744 more than the average single pensioner’s income.
The research involved an analysis of Government statistics, a survey of more than 1,000 adults, interviews with 400 elderly people receiving care at home and their families, and a survey of 55 residential homes.
The findings suggested that most people would prefer to remain in their own homes, with nursing care and support to continue living in their local communities. The second most popular option for long-term care was sheltered accommodation, while just 17% said they would rather move into a residential home.
The analysis follows a warning this week from Europe’s human rights commissioner, Thomas Hammarberg, that Britain’s care system is in “crisis” as privatised care home operators struggle to maintain good quality services in the face of funding cuts. ( telegraph.co.uk )
How to make money from a manor house - Owners of big houses face a dilemma when their children grow up: sell up or stay put. Max Davidson looks at different approaches
To sell or not to sell? For owners of big country houses, who have lavished years of love and attention on their properties, it can be an agonising choice.
Sell and they kiss goodbye to a large part of their life. Stay put and they risk ending up in a house that is too big, expensive to maintain and crumbling around them.
It can be very difficult to strike the right balance between nostalgia and pragmatism, particularly about a beloved family home.
“This house has been a labour of love,” says Julian Bannerman, owner of Hanham Court, in Gloucestershire. “I think of it as a republic, self-contained, a world within a world. But there is no point in clinging to the past. You have to move on.”
Julian and his wife, Isabel, are award-winning garden designers, responsible, inter alia, for the British 9/11 Memorial Garden in Manhattan and the Stumpery at Highgrove. They have worked at some of the best-known stately homes in England, from Waddesdon Manor to Arundel Castle, but it is Hanham Court, which they acquired in 1993, that is their pride and joy.
Hanham Court is on the market for £2.5 million through Savills (01225 474500; www.savills.co.uk)
Hanham Court, which is mainly Tudor, was a wreck when Julian and Isabel Bannerman took it on in 1993
In 2010, Hanham was voted number one Dreamy Garden in Britain in Gardens Illustrated. It is easy to see why. The gardens – open to the public two afternoons a week in summer – have a fairy-tale quality, seducing the eye and beguiling you with their subtle scents. There is a formal area, bordered by lilies, old roses, tree peonies and fountains. A woodland garden is overrun with tree ferns, snowdrops and magnolias, while meadows of wild flowers overlook the River Avon.
Everything any gardener could ever wish for, and much more besides, is seamlessly blended into the 26-acre estate. Whoever buys Hanham, which the Bannermans have finally decided to sell, is privileged indeed. But of course – and this is the pathos of selling up – what they do with it is anybody’s guess.
“The sort of buyer I have in mind is someone abroad who is dreaming of England,” says Julian. “But who knows what will happen to the place? There is no point in trying to keep it the way it is.”
Julian turns 60 this year, and he and his wife will soon be empty-nesters. The last of their three sons is in his final year at school. It seems the right time to move on. They have already bought a smaller property in Norfolk, which will be their base for the immediate future.
But they will be leaving a wealth of memories behind, with the life of the family inseparable from the life of the property. On the very day they moved into Hanham, Isabel was rushed into hospital to give birth to their second son. “This was our sons’ childhood,” she says. “They have loved Hanham as much as we have.”
If the garden is the pièce de résistance, the house is not too shabby either. This sense, of a grand old country home blending perfectly into its surroundings, gives Hanham its enduring appeal.
The earliest part of the building is the chapel, which dates back to the 13th century and is now incorporated into the main house, a large Tudor property with many later additions, such as Palladian windows, Victorian turrets and gargoyles.
For 200 years, Hanham belonged to the Creswicke family, prosperous local gentry, before a period of decline in the 20th century.
When the Bannermans moved in the place was a wreck, with plastic cornices and other modern excrescences, which had to be weeded out if the property was to be restored to its former glory.
For years, it was a work in progress, all higgledy-piggledy, rather than a candidate for the Ideal Home Exhibition.
“Many of our friends found the borstal-cum-bed-and-breakfast aspect of Hanham daunting,” says Julian. But though the plumbing and central heating were erratic, there was no getting away from the romantic charm of the property, with its wood-panelled halls, quirkily shaped bedrooms and Tudor spiral staircases. It is a place of magic and adventure, for adults and children alike.
Julian says that the two things he will miss most about the property are the wisteria and the Elizabethan fireplace.
“I’ve never known a fireplace that both looks so good and functions so perfectly,” he says. Leaving will be a wrench, one way and another.
The Bannermans are unusual in that they are not under financial pressure to move. But for many, the upkeep of such a home can be prohibitive: roofs and windows have to be replaced, and the heating bills read like bad jokes in Christmas crackers. The trouble is that “sensible” options for balancing the books tend to get muddied by sentimental considerations.
“We all know in life what we should be doing, but that doesn’t mean we do it,” says Ruth Watson, the presenter of Channel 4’s Country House Rescue. The show’s cavalcade of aristos with moneymaking wheezes, such as butterfly farms, has made the programme compelling viewing for lovers of English social comedy.
Luckily, not all cash-strapped owners of country houses are so eccentric. Some bring a welcome pragmatism to the task of staying put, come hell or high water, in the home of their ancestors. A hundred miles to the east of Hanham Court, in West Sussex, the Fifth Viscount Mersey – Ned Bigham to his friends – has no intention of selling up.
Bignor Park, the family seat for generations, is a magnificent Georgian property set in 1,200 acres overlooking the South Downs. It is still a family home – Lord Mersey lives there with his wife and children, while his mother has a cottage in the grounds. But it is also a commercial business.
“I had to do some serious number-crunching when I inherited the title in 2006,” he says. “My father was a lovely man who took his responsibilities to the estate and its staff seriously. He was a bit like the Earl of Grantham in Downton Abbey. But he was not always very practical. His passion was forestry and he planted many new trees on the estate. But forestry is a long-term investment: you have to wait years before it produces revenue. I needed money for extras such as gravelling the drive and maintaining the garden, neither of which is cheap.”
There is more money in weddings than trees, and it is to weddings that Lord Mersey is looking to boost his family income. Bignor Park is the only property in West Sussex licensed to hold outdoor weddings and, for £3,000 a pop, you can rent the Greek loggia and surrounding land to hold a ceremony.
It used to be just family and friends who got hitched at Bignor, but the venue is now open to all-comers. “We don’t want the whole thing to turn into a conveyor belt,” says Lord Mersey.
“We’re not offering cut-price deals if you get married on a Tuesday in February or anything like that, but we are taking the operation seriously. I have a first-class events manager and have cherry-picked the catering companies, so the quality is guaranteed.”
If weddings are the big new attraction, they are not the only source of income. The golf course option was considered by the Fourth Viscount but rejected. Yet there are five cottages in the grounds, let out commercially, which are nice little earners. A recent fashion-shoot with Emma Watson suggests that it could have a future being used as a dramatic set.
Lord Mersey works in the music industry and, although turning Bignor into a recording studio is not viable, he likes the idea of staging concerts on the estate. “I’m not thinking of gigs attracting 20,000 fans,” he says. “They already hold big concerts at Petworth and Cowdray Park. But it would be nice to host the odd boutique event.”
Scraping every last penny out of the estate is not the objective. Nor are hare-brained schemes or aristocratic follies. “We just want to do sensible businesslike things,” says Lord Mersey. “That is the best way to guarantee the future of Bignor.”
He is following a different course from the Bannermans, but he is certainly following it with gusto. ( telegraph.co.uk)
Four Ways Your Home Can Pay You - Despite being financially stressed and worried about retirement, homeowners, by and large, continue to see their homes as a roof over their head and not a key financial asset that may improve their retirement prospects. According to research by the Society of Actuaries, only about 20 percent of homeowners plan to use their home equity to help finance retirement. Of those who do, few have thought about tapping their home's value and simply plan to sell it to generate retirement funds.
"Even for middle-income and moderately affluent Americans in their critical preretirement years (55-64), non-financial assets, principally home equity, may represent as much as 70 percent of total assets exclusive of pensions and Social Security," the report said. Tom Horgan, a Society of Actuaries spokesman and former chief actuary of the Federal Housing Administration, agrees with traditional advice that home equity should only be tapped when necessary, and when it helps achieve a specific retirement objective. In most cases, his best advice for homeowners approaching retirement is to sell their home and downsize into smaller, less-expensive living quarters that also may be closer to shopping and cultural activities. Renting an apartment also eliminates property taxes and most maintenance expenses.
"Retirees are really not looking at home equity as an attractive option for helping to fund their retirement," says another Society of Actuaries spokesman, Steve Siegal. "I think people tend to look at their houses as an anchoring point, and are kind of reluctant to mess with that. There's an emotional attachment there." While echoing Horgan's emphasis on only accessing home equity after very careful thought, Siegal adds that the study found that people were "not exploring any of the options. The point is that people should explore options and find out what's right for them."
There were slightly more than 23 million U.S. households in 2009 headed by someone at least 65 years old, according to federal housing statistics. About 80 percent of these households owned their homes, and of these, 65 percent had no mortgage or other home debt. Even with sharp housing price declines, the median value of homes owned by older people was about $150,000—over $100,000 more than they paid for it.
The best home-finance solutions, experts agree, tend to be the ones that meet an individual's specific needs. The major variables in home equity use include age, health and healthcare expenses, marital and family situation, life expectancy, current and future income streams, family assets, and estate considerations. In short, just about all significant life decisions can come into play in deciding how to deal with your home as a possible retirement asset.
There are four major types of decisions that involve your home and your future: borrowing against the value of your home, generating rental income from your home, taking full advantage of government tax breaks, and moving into a residence that cuts monthly housing expenses and is more aligned with reduced retirement income levels:
1. Loans.
Home equity loans and mortgage refinancings are rarely advised for paying basic retirement expenses, but they may make sense for special needs or one-time projects. Usually, borrowers need a reliable income stream to satisfy lenders of their ability to repay the loan. In some cases your retirement income would be enough, but you'd need to satisfy lenders that you have enough left over after paying your living expenses to service and repay the loan. Reverse mortgages do not require repayment but usually only make sense for people who plan to stay in their homes for a long time and do not intend to sell them and use the proceeds for other retirement needs. If you have a mortgage and are sure you want to downsize to a smaller home in a few years, consider refinancing your mortgage into a five-year adjustable rate mortgage. You will save a lot of money on mortgage payments and can use those savings to pay down your home loan even further. Just make sure you can sell the home before the five-year reset deadline occurs.
2. Income.
Consider renting out a room in your home to generate extra income. This may make special sense if you're still carrying a mortgage on the property. Most retirees bring home less money in retirement than when they worked, which can make carrying a mortgage very difficult. Rental income can help you pay off the mortgage and take a lot of pressure off of your retirement budget. You could even consider renting our your entire home for a visiting vacationer. It could pay for your own vacation, and tax specialist CCH says if you rent out your home fewer than 15 days a year, you don't even have to include the money you receive as gross income on your tax return.
3. Taxes.
The mortgage tax break may be reduced or even disappear as Congress wrestles with reforming the tax code and reducing budget deficits. But for now, it's the largest single tax break that individuals receive. Interest on home equity loans is usually deductible. There may also be energy credits and other tax breaks that make sense.
4. Moving.
Downsizing can be the smartest way to let your home—or in this case, your new home—pay you money. Reduced living expenses, smaller utility bills, and even lower commuting costs should be on your mind as you consider how you will balance the household budget during your retirement years. Moving closer to key shopping and cultural activities can not only save you money, but also make increasing sense as you age and your time behind the wheel of a car grows shorter. Think carefully about whether you want to rent or buy your new home. And don't forget that gains on the sale of your current home—up to $500,000 in gains for a couple—are tax-free. ( .usnews.com )
