Care Home Contracts and Fee Increase Terms: What to Include

The funding mechanics of care home fees — who pays, top-ups, CHC eligibility — get plenty of attention, but the actual contract a resident or their family signs is just as important and often less well understood. A poorly drafted or poorly explained contract creates disputes down the line, while a clear one protects both the resident and the home when circumstances change.

What Should Be in a Care Home Contract

The Competition and Markets Authority's guidance on consumer law in care homes sets out expectations that go well beyond a simple fee schedule: the contract should clearly state what's included in the basic fee versus what incurs additional charges, the notice period for fee increases and for ending the contract, what happens if the resident's needs change and require a different level of care, and the process for handling a resident's death, including how fees are calculated for the final period of residence. Contracts that are vague on these points — or that bury important terms in dense legal language — have been a recurring source of CMA enforcement action against care providers.

Fee Increase Notice Periods

This is one of the most common sources of family frustration. CMA guidance expects providers to give reasonable advance notice of fee increases — usually interpreted as at least 28 days, though many providers give longer — and to explain clearly what's driving the increase, whether that's rising costs, a change in the resident's care needs, or an annual review. A contract that allows the home to increase fees with minimal or no notice, or that doesn't explain the basis for an increase, sits on shaky ground both contractually and reputationally.

Deposits and Advance Payments

Where a home asks for a deposit or advance payment, particularly from self-funding residents, the contract needs to be explicit about what it covers, whether it's refundable, and under what circumstances it would be retained. Requiring an unreasonably large deposit, or being unclear about refund conditions, is another area the CMA has flagged as a common unfair practice — transparency here protects the home from complaints as much as it protects the resident.

What Happens When a Resident Dies

Contracts should set out clearly how fees are calculated for the period immediately following a resident's death — commonly capped at a short number of days needed to clear the room — rather than continuing to charge full fees indefinitely or, at the other extreme, leaving families with an unclear bill during an already difficult time. Being upfront about this in the contract, rather than only explaining it after a death has occurred, avoids adding administrative stress to grief.

Changes in Care Needs

A resident's needs can increase significantly after admission — a fall, a diagnosis, a decline in mobility — and the contract should explain how this affects fees: whether there's a reassessment process, how much notice is given before a fee change tied to increased needs takes effect, and what recourse the resident or family has if they disagree with the reassessment. Building this into the contract from the outset, rather than negotiating it informally each time it arises, reduces disputes considerably.

Making Contracts Genuinely Understandable

Beyond the legal content, how a contract is presented matters. Plain-language summaries alongside the full legal text, a walkthrough conversation at the point of signing rather than just a signature request, and a named contact for questions after admission all help residents and families genuinely understand what they've agreed to — which in turn reduces the likelihood of disputes and complaints later.

Cooling-Off Periods and Pre-Contract Information

CMA guidance also expects providers to give prospective residents and families clear, accessible information before a contract is signed, not just at the point of signing itself — full fee structures, what's included, and key terms should be available for genuine consideration in advance. Many providers build in a short cooling-off period after signing, allowing a new resident or their family to reconsider without financial penalty if the placement turns out not to be the right fit once they've experienced it directly.

Frequently Asked Questions

How much notice should a care home give before increasing fees?
CMA guidance expects reasonable advance notice, commonly at least 28 days, along with a clear explanation of what's driving the increase.

What should a care home contract say about fees after a resident's death?
It should clearly state how fees are calculated for the period after death, commonly capped at a short number of days, so families aren't left with an unclear bill during bereavement.

Can a care home increase fees if a resident's needs change?
Yes, but the contract should explain the reassessment process, the notice period for any change, and what recourse the resident or family has if they disagree.

Contract terms sit alongside the funding mechanisms covered in our guides to top-up fees and third-party contributions and NHS Continuing Healthcare funding. For structured training on care home governance and compliance, see Learnsignal's CPD courses.