Deferred Payment Agreement
What is a Deferred Payment Agreement?
The benefits of a Deferred Payment Agreement
Am I eligible for a Deferred Payment Agreement?
How do I apply for Deferred Payment Agreement?
Do charges and interest apply to Deferred Payment Agreements?
Can I end the Deferred Payment Agreement?
Alternatives to the Deferred Payment Agreement?
Can a Deferred Payment Agreement be refused?
What if I'm not happy with the decision?
A ‘Deferred Payment Agreement’ is an agreement with us which could help you to use the value of your home to fund residential care costs.
For the first 12 weeks of your permanent admission to a residential or nursing care home the value of your main property is not taken into account and you may be able to receive additional financial support from the Council. This is known as the 12 week property disregard period.
You will pay a weekly contribution towards your care from your income and other savings. This is worked out by an assessment of your ﬁnances and is called your assessed weekly charge. This will apply if you do not have other financial resources of more than £23,250, such as savings, shares or another property. At the end of the 12 week property disregard period, your main property will be included in your financial assessment and you will be assessed as having to pay the full cost of your residential or nursing care.
You may be eligible for a Deferred Payment Agreement if you are assessed by the council as having to pay the full cost of your residential or nursing care but you are unable to pay the full weekly charge because your capital is tied up in your property. The council will then pay the difference between your assessed weekly contribution and the actual cost of your care in a residential or nursing care home. This amount paid by the council becomes the deferred payment.
The deferred payment amount you are assessed as having to pay for your care and support is delayed and not ‘written off’ and the costs of your care and support will still have to be repaid by you or someone on your behalf at a later date either when you choose to sell your house or 90 days after your death.
- You will not be forced to sell your home;
- You could rent out your home and create some income for yourself which would reduce the amount you had to pay us back when the house was sold.
- You might be entitled to claim some benefits which you could use towards your charges.
- If there is an existing agreement for a third party "top up", where a family member or other person puts additional money towards your placement, and you decide to take advantage of the Deferred Payments Agreement; you can add the cost of the "top up" payments (after the 12 week property disregard period has ended) to your Deferred Payments Agreement loan, if the council agrees there is enough equity in your home. The deferred payment is currently, according to government rules, the only way of paying any agreed top-up yourself without depending on a third party.
Usually you will need to meet the following criteria to qualify:
- your needs are being met in a care home, or in some cases supported living accommodation, and you have been assessed as having eligible needs which that should be met through a care home placement;
- you have no more than £23,250 in assets (i.e. in savings and other non-housing assets) excluding the value of your home;
- you must own or have part legal ownership of the property, which is not benefitting from a property disregard, for example is not occupied by a spouse or dependent relative as defined in the council's charging policy. Your property must be insured (if it is not, you must arrange for it to be insured at your own expense).
- allow the council to have the ﬁrst legal charge on your property. There can be no other beneficial interests on the property, for example outstanding mortgages or equity release schemes, unless this is approved by the local authority.
- have mental capacity to consent to a Deferred Payment Agreement or have a legally appointed representative willing to do this for you.
- ensure the property is registered with the Land Registry (if it is not then you must arrange for this to be done at your own expense).
If you do not entirely meet the above criteria you may still be able to access the deferred payment scheme; eligibility will be decided on a case by case basis.
Whilst in the agreement you will also need to:
- Have a responsible person willing and able to ensure that necessary maintenance is carried out on the property to retain its value; you are liable for any such expenses.
- Insure your property at your expense.
- Pay your contribution regularly and on time; if you do not we retain the right to add this debt to the loan amount.
- Ensure there are no other beneﬁcial interests on the property, for example outstanding mortgages or equity release schemes, unless this is approved by us.
As part of your financial assessment you will be advised if you qualify for a Deferred Payments Agreement and what you need to do to apply. You may also be advised that there are alternative options you can consider. This can be a difficult and confusing time and we strongly recommend that you get independent financial advice before you enter into any agreement.
Under the Care Act local authorities are able to charge an administration fee for arranging and running the deferred payment agreement and interest on any accrued debt. By law the administration charge should not exceed the costs of providing a deferred payment arrangement and interest will be in line with a national standard set by the government.
The council will inform you before you enter into a deferred payment agreement what the interest rates are currently set at and when interest rates are likely to change. You will be advised to seek independent legal and financial advice before you enter into an agreement.
You can end the Deferred Payment Agreement in a number of ways:
- voluntarily by you, or someone acting on your behalf, paying the full amount that is due;
- when the property or other form of security is sold and the council is repaid;
- upon death of the person receiving care and the amount is repaid to the council from their estate.
On ending the agreement, the full amount due must be paid to the council.
If you don’t want to have a Deferred Payment Agreement, there are other ways to pay for your care costs. Some examples are as follows:
- You may choose to rent out your property and use the income from this.
- You may also choose to pay the full cost of your care from your available income and savings/assets; or a family member may choose to pay some or all of this for you.
- If your property is up for sale and on the market, you may wish to consider obtaining a Solicitor’s Undertaking.
The council can refuse a request for a deferred payment. In such circumstances the decision will be notified in writing to the applicant and/or their personal representative. The decision will set out the grounds for refusal and provide for appeal rights. See the section on eligibility (above) for circumstances which may potentially lead to such a refusal.
There may be circumstances where it is not possible to put a Deferred Payment Agreement in place even if you qualify under the eligibility criteria, for example:
- where we are unable to secure future payment of the costs against the property or asset which is the proposed security;
- the property or asset being used as the proposed security is uninsurable;
- where you want to defer costs which are more than the property or asset is worth;
- where you do not agree to the terms and conditions of the agreement;
- if you are unable to make your own decisions and do not have a power of attorney in place for someone to act on your behalf.
There may also be circumstances when the council may decide not to defer further charges for you under the Deferred Payment Agreement, although this does not allow the council to demand repayment in such circumstances.
The decision can be reviewed in the following circumstances:
- the decisions to refuse the application did not take into account any new information which would have changed the decision;
- there are eligible care costs the council have to take into account.
If you are dissatisfied with the outcome of the review, you can appeal within twenty working days of being notified of the outcome of the review. This period can be extended for exceptional reasons.
If you or your representative remain dissatisfied with any aspect of the Deferred Payment Agreement scheme, you should follow the Customer Feedback & Complaints Procedure
For more information on our Deferred Payment Policy and the Care Act: