Can You Rent Out a Parent's Home to Pay Care Fees?

By · Published 2025-11-13 · Last reviewed 2026-09-18

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Yes. Many families let a parent's home after they move into a care home and use the rent towards fees, often alongside a council deferred payment agreement. Renting does not stop the home counting in the means test, the rent is taxable income, and whoever manages it takes on a landlord's legal duties, so weigh the costs and risks before deciding.

Yes, you can usually rent out a parent's home to help pay care home fees, and many families do. The rent can cover part of the fees, and a council deferred payment agreement can cover the rest while the house is kept.

But letting is not a way around the means test. The home's value still counts after the first 12 weeks unless a disregard applies, the rent is taxable, and someone has to take on a landlord's legal responsibilities. This guide explains how it works, mainly under the rules in England.

Does renting out the house stop it counting for care fees?

No. In England, when someone moves permanently into a care home, the council must ignore the value of their main home for the first 12 weeks. After that, the home counts as capital in the financial assessment unless a disregard applies, for example because a partner or a relative aged 60 or over or incapacitated still lives there. This is set out in the Care and support statutory guidance.

Letting the property to a tenant does not change that. In most cases, the home's value puts your parent over the upper capital limit (£23,250 in England in 2026/27), so they pay the full fee. The question is how to pay it without selling straight away.

Rules differ elsewhere in the UK. Wales has a higher capital limit, Scotland has different limits and free personal care, and Northern Ireland's Health and Social Care Trusts run the assessment. Check the rules for your nation.

How do rent and a deferred payment agreement work together?

A deferred payment agreement (DPA) is a loan from the council, secured on the home, that pays some or all of the care fees until the house is sold or the person dies. In England, councils must offer one to people who meet the eligibility conditions, and may charge interest up to a nationally set maximum plus administration fees.

If your parent has a DPA and rents out the home, the statutory guidance says the council should allow them to keep a percentage of the rental income. The rest goes towards fees, reducing the amount borrowed and the interest that builds up.

A typical arrangement looks like this:

  1. The 12-week property disregard gives time to decide.
  2. The family applies for a DPA before the disregard ends.
  3. The house is let, and rent is paid towards fees.
  4. The DPA covers the shortfall, secured on the home.
  5. The debt is repaid when the home is eventually sold or from the estate.

Ask the council for its DPA information, including its interest rate, fees and how it treats rental income.

Whoever lets the property becomes a landlord. In England and Wales, GOV.UK lists responsibilities including:

In England, the Renters' Rights Act has also changed the rules. From 1 May 2026, section 21 "no fault" evictions ended, and landlords must use a legal ground for possession, such as wanting to sell. Build this into your plans: you may need time to regain possession before a sale.

Scotland, Wales and Northern Ireland have their own tenancy laws. In Scotland, for example, landlords must register with the council. Many families use a letting agent to handle compliance.

How is rental income taxed?

Rent is taxable income for the owner, your parent, not for the family members managing it. According to HMRC guidance on GOV.UK, the first £1,000 a year of property income is tax-free under the property allowance. Landlords with higher costs can instead deduct allowable expenses such as letting agent fees, repairs and insurance. Above set thresholds, the income must be reported through Self Assessment.

Because rent is added to pensions and other income, it could push your parent into paying Income Tax, or more of it. Letting the former home can also affect the tax position when it is eventually sold. Get advice from an accountant before letting.

Who can manage the letting if my parent cannot?

Your parent can make the decisions while they have mental capacity to do so. If they cannot, someone needs legal authority:

Attorneys must keep your parent's money separate from their own and keep records. The rent belongs to your parent.

Is renting out better than selling?

It depends on the numbers and on your family. Consider:

For many families, letting works best when the rent is a good share of the fees and the family is happy for the house to be kept for several years. This is general information: speak to the council, and consider a regulated adviser who specialises in later-life care, before deciding.

Frequently asked questions

Will the rent reduce what the council pays?

If your parent's capital, including the home, is above the upper limit, the council is not paying anyway. Under a deferred payment agreement, most of the rent goes towards fees, though the council should let your parent keep a percentage. The rules on how rent is treated can be complicated, so ask the council to explain their calculation.

Can I live in my parent's house instead of renting it out?

If you are a relative aged 60 or over, or incapacitated, and lived there before your parent went into care, the home may be disregarded altogether. Otherwise, the council may still count the home, though it has discretion in some cases. Ask the council how your circumstances are treated.

Do I need permission from the mortgage lender or insurer?

Yes, if there is a mortgage, you need the lender's consent to let. You also need landlord insurance, because a standard home policy usually does not cover a let property.

Can we sell the house later if we rent it out now?

Yes, but in England you can no longer end a tenancy with a no-fault section 21 notice from 1 May 2026. You will need to use a legal ground for possession, such as selling, which includes notice periods.

Who pays tax on the rent?

Your parent, as the owner. The first £1,000 of property income each year is tax-free under the property allowance, or allowable expenses can be deducted instead. An attorney or deputy handles the tax return on their behalf if needed.

Key takeaways