Get independent financial advice about deferred payment agreements.
We can pay part of the care home bills for you until:
- you choose to sell your home
- your estate sells your home after your death
This is known as a ‘Deferred Payment Agreement’ (DPA) which is a temporary agreement with the council.
Qualifying for a Deferred Payment Agreement (DPA)
Your home must be registered with the land registry.
You must ‘have the mental capacity’ to understand the agreement and how it works. Someone may lack mental capacity because, for example, they have:
- dementia
- had a serious brain injury or illness
If you don't have the mental capacity to understand the agreement, someone else must have the legal power to make decisions on your behalf.
You may want to give someone else the legal power to manage your affairs in case you are unable to in the future.
Applying for a deferred payment agreement
You will need to request a care and support assessment which will also mean completing a financial assessment.
If the scheme is suitable we will send you an application form for completion. If you’re applying for a deferred payment for a relative, you must have the legal power to manage their affairs.
Signing the agreement
You or the person who has the legal power to manage your affairs has to sign the deferred payment agreement. If you own your home jointly with another person, they must also sign the agreement.
We will invoice you for the amount you are paying towards the cost of the care home until the agreement is in place.
Fees and interest
The council will charge fees in relation to a DPA.
- £241 application fee
- £150 to value your home
- £210 to set up the deferred payment agreement
- £203 to finalise the deferred payment agreement
- £95 once a year to cover the cost of managing the agreement
- £150 to revalue your home - every other year and when you've used half (50%), and 70%, of your equity in the property or if the value of your home changes
The fees are usually subject to change on 1 April each year.
Once an application for a DPA has been made the resident or their personal representative will be liable to pay all the fees and costs incurred. This includes when the application cannot, or is not completed because:
- the application is withdrawn
- the resident passes away
- the required terms and conditions are not met
Interest is charged on the amount owed. The Government sets the maximum interest rate. The rate can change every six months on 1 January and 1 July.
You can pay the fees and interest when they are due or add them to your deferred payment agreement. The rate for:
- 1 January 2023 to 30 June 2023 was 3.18% per year
- 1 July 2023 to 31 December is 3.43% per year
- 1 January 2024 to 30 June 2024 is 4.65% per year
- 1 July 2024 to 31 December is 4.05% per year
You can find past rates in our deferred payment scheme information sheet:
Statements
We will send you statements every 6 months telling you:
- interest and fees you've been charged up to the date of the statement
- total amount you owe
- equity left in the property
- when you're likely to use up the equity left in the property at the current rate you're paying
You can ask for a statement at any time. We will send it to you within 28 days.
How we work it out
The maximum amount that can be deferred is the value of your home, minus 10%, minus the lower savings and assets limit (£14,250).
Example
Mrs Smith owns a house worth £200,000. The maximum amount that she can defer would be:
£200,000, minus £20,000 (10%), minus £14,250 = £165,750.
Valuing your home
The council’s Property Services department will value your home.
They will value it again when you've used half of the amount deferred. This is to make sure that the value of your home still covers the likely cost of your care.
Combining a deferred payment with other ways to pay
You can combine a deferred payment with money from:
- your income – including a pension
- savings or other assets
- someone else or a charity
- a financial product you’ve bought to pay for long-term care
You have the right to keep up to £144 a week of your income (known as the ‘disposable income allowance’). You can choose to keep less than that and put more towards the cost of your care.
Upkeep of your home
You must make sure that all necessary repairs and maintenance are done to your home – using your disposable income allowance.
Insuring your home
You must insure your home with the correct insurance.
You must be able to show us:
- a copy of the insurance policy
- a receipt or other evidence of the last renewal of the policy
- how much and how long the property is insured for
You must not knowingly do anything that will make the insurance policy invalid, e.g., not telling your insurer that a property is unoccupied or you have builders in if your policy says you must tell the insurer.
Renting out your home
You can rent out your home. You’ll need to:
- have a shorthold tenancy agreement with the tenant with an initial term of not more than 6 months
- give us a copy of the agreement
- have landlord insurance
You’ll be able to keep half the rental income. You’ll have to put the rest towards the cost of the care home.
Selling your home
You can choose to sell your home during your lifetime or the executor of your estate can sell it after your death. When the home is sold, you or your executor must repay the full amount due on the deferred payment agreement.
Time limits
The amount owed on the deferred payment agreement will be due 90 days after your death. We will charge interest on the amount owed until it’s repaid in full.
Securing the deferred payment
We will take out a ‘legal charge’ against the property to make sure the amount you owe on the deferred payment agreement is paid back. A legal charge is a document held by the Land Registry that shows we have a claim on the property.
We will remove the legal charge when you or your executor pay back the amount owed on the deferred payment agreement – including fees and interest.
You can't take any other loans against the value of your home without our written permission.