If you or a loved one might one day need a care home, you might want to sit down before reading this: in England, one in seven nursing homes now charges self-funding residents more than £1,800 a week.

That’s right — for many people, the weekly cost of a care home is now more than the average monthly mortgage payment. The gap between what private payers and local authorities pay has never been wider.

Self-Funders Pay Much More

According to care market analysts LaingBuisson, councils currently pay an average of £908 a week for a place in a residential home. However, if you’re paying privately, the figure increases to £1,278 — a difference of £370 per week, or approximately £19,240 per year.

In nursing homes, where residents need more complex care, the gap is similar: councils pay around £1,225 a week, while private payers face an average of £1,594.

Why the difference? William Laing, founder of LaingBuisson, explains:

“Local authorities are using their large purchasing power to drive prices down — and those paying for their care are effectively subsidising the cost.”

 

Why Are Costs So High?

Several factors are driving the rise in fees:

• Higher care needs – More residents now have dementia or other complex conditions, requiring extra staff and specialist support.
• Wage increases – From April, the National Living Wage rose from £11.44 to £12.21 an hour.
• Tax changes – Employer National Insurance contributions are increasing from 13.8% to 15%.
• General inflation – Running costs for heating, food, and maintenance have climbed sharply.

The numbers tell the story: in just two years, the average weekly residential care fee for private payers has risen from £1,086 to £1,278. Nursing home fees have jumped from £1,349 to £1,594.

Social Care Reform – Stuck in the Slow Lane

The government had promised reforms to cap the amount anyone would pay for care in their lifetime at £86,000 and to raise the savings threshold from £23,250 to £100,000. Both plans were scrapped last year by Chancellor Rachel Reeves, and any new reform has been delayed until at least 2028.

That means the current rules stay in place — and they’re strict.

Who Gets Help With Care Home Fees?

In England and Northern Ireland, you can get financial help with care home costs if you have less than £23,250 in assets (including the value of your home, unless a spouse or certain relatives still live there).

• Scotland’s threshold is £35,000.
• Wales’s threshold is £50,000.

If you’re receiving care in your own home, your property isn’t counted in the assessment.

NHS Continuing Healthcare – Free, But Hard to Get

Some people with complex medical needs qualify for NHS Continuing Healthcare — free care in a home or at home, not means-tested. But here’s the catch: only around 1 in 5 applications succeed.

The process involves a two-stage assessment, scoring needs in areas like mobility, cognition, and continence. Decisions vary between local NHS boards, and the criteria can be complex even for professionals to navigate. You can appeal, but you must do so within six months, and the process can take some time.

If you don’t qualify, there’s NHS-funded Nursing Care — a flat £235.88 per week paid directly to the nursing home to help cover nursing costs. This has a higher success rate but is only available in registered nursing homes.

The Live-In Care Alternative

Due to the significant increase in residential care fees, and particularly if more than one member of the household needs care support, live-in care can sometimes be more cost-effective than residential care. Care home fees often include meals, laundry, and extras like hair appointments, which you may not need or want to pay for.

Planning – The £100,000 Rule of Thumb

Care is expensive — and unpredictable. One common rule of thumb is to budget £100,000 a year for your final three years. But with fees rising at the current pace, even that might not be enough.

If you want certainty that you can stay in your chosen care home for life, you might consider an Immediate Needs Annuity — an insurance policy that pays the home directly for as long as you need care. The payments aren’t taxed, and some policies rise in line with fees.

The downside? They’re expensive up front — often tens of thousands of pounds — and if your needs change, you can’t usually cancel.

The Bottom Line

Currently, the system results in self-funders paying significantly more than those supported by councils, and this disparity is growing. With reforms delayed, planning — whether that’s through savings, insurance, or considering alternatives like live-in care — is the best way to protect your choices later in life.

Because when it comes to care, the earlier you prepare, the more control you’ll have over where and how you live in your later years.

 

📌 Key Points to Remember

• Running Out of Funds – Many Local Authorities will not pay the full cost of some residential home beds, so if you run out of funds, you may have to move to a different care home or find a “third-party” top-up.
• Fees vary across England, with urban areas and the South generally costing more.
• If you’re self-funding, you can choose any care home that will accept your budget.
• It’s worth getting an assessment early, even if you don’t think you’ll qualify for funding.
• Ask about top-up fees before signing any agreements.