Deferred payment agreements

A Deferred Payment Agreement (DPA) is an arrangement that can enable people to use the value of their homes to help pay for their care home costs.

If you are eligible, Slough will help to pay your care home bills on your behalf. The amount that Slough pays will be secured by a legal charge against your home. This can delay the need to sell your home as you make the transition into care.

You will still be required to contribute towards the cost of your care based on a financial assessment of your income, savings and other capital.

There is a fee for setting the arrangement up, and interest will be charged on the amount owed.

Who is eligible for a DPA?

Subject to adequate security (see below) and acceptance of terms and conditions, Slough will offer you a DPA if you meet all three of the following criteria at the point you apply:

  1. you are assessed by the council to have needs that are best met in a care home, or in supported living accommodation.
  2. the value of your savings / capital (excluding your home) is below the threshold set by the Department of Health (for 2015-16 this is £23,250, which is reviewed annually).
  3. your home is not disregarded for purposes of the financial assessment, eg because a spouse or dependent relative is living there.

There may be other circumstances in which Slough could offer you a DPA at its discretion, for example if you wish to use the equity in your home to help pay for care in a more expensive setting.

Entitlement to a DPA applies equally, whether your care is wholly or partly council-funded, or you fund the costs of your own care.

Slough will need to make sure that you have the capacity to understand the agreement you are entering into. If we are concerned that you do not have the capacity to understand, or will not have capacity to understand in the near future, then a properly authorised person will need to represent you. If you already have a Finance and Property Attorney or a Deputy, we will need evidence of this before they can sign the DPA on your behalf. If you do not have a Finance and Property Attorney or a Deputy, an application will need to be made to the Court of Protection:

  • a family member willing to take on the role may make a Deputyship application, or
  • in the absence of such a candidate, an application may be made for a Panel Deputy to be appointed, or
  • Slough may take the view that it will apply for Deputyship, depending on the council's resources and the composition and value of your assets.

How does a DPA work?

Security

A DPA will normally be secured by a first legal charge on your home. If your home is not registered with the Land Registry, your own solicitor will need to register it. Slough may at its discretion accept other forms of security, and will consider each case on its merits.

Where the property is jointly-owned, both owners’ consent to the charge will be required. Similarly, where someone else has a beneficial interest in the property, their consent will be required.

How much you can defer

The amount you can defer will depend on the value of your home, which determines your ‘equity limit’. This will be calculated using the following formula:

Value of the property
less 10%
less the lower threshold set by the Department of Health (for 2015-16 this is £14,250, which is reviewed annually)
less any other charges on the property

To determine the value of your home, Slough will obtain a valuation, the cost of which will be added to the deferred amount unless you have agreed to pay this separately. You may also, if you wish, obtain your own independent valuation.

In considering a request for a discretionary DPA, eg to help pay for care in a more expensive setting, Slough will consider with you the sustainability of the proposed arrangement – how long you would be able to defer your care costs for.

Repaying the DPA

The DPA may be terminated in three ways:

  1. by selling your home and repaying the council
  2. by you, or someone acting on your behalf, repaying the full amount due
  3. when you die and the amount is repaid from your estate.

On termination, the full amount due (including care costs, interest accrued and any fees added to the deferred amount) must be paid to the council. In the case of payment from your estate, responsibility for arranging repayment falls to your executor.

While the DPA is in place

Slough will:

  • provide you with a statement every 6 months (or on 28 days’ notice) showing your progress towards the equity limit, including any interest or fees to be deferred
  • reassess the value of the security when you reach 50% of the equity limit
  • review the arrangement with you if the amount deferred reaches 70% of the equity limit

You must:

  • if you are contributing to the cost of your care, tell the council of changes in your income or savings / capital
  • tell the council if your care and support needs change in a way that means you may no longer be eligible for deferred payments
  • tell the council if a change in circumstances means that your home should be disregarded in your financial assessment
  • make appropriate arrangement to insure and maintain your home, and provide the council with details (insurance and maintenance costs will be taken into account in your financial assessment)
  • obtain the council’s consent for anyone to move into the property
  • tell the council if you intend to sell the property and when it is sold
  • tell the council if you, or someone acting on your behalf, intend to repay the full amount due.

What will it cost?

Arrangement fee

There is a fee for setting the arrangement up. For 2015-16, this is £595. In addition to this, you will need to pay certain disbursements:

  • valuation (and, where required, re-valuation) fees
  • Land Registry charges and associated costs.

These costs will normally be added to the deferred amount, unless you have agreed to pay them separately.

Interest

Interest will be charged on the deferred amount on a compound basis until the debt is repaid. The rate of interest is currently 1.85%, effective from 1 July 2016, and is normally reviewed every 6 months, in June and December. Interest will continue to accrue even when the equity limit has been reached.

Attendance Allowance

An advantage of a DPA is that you can claim Attendance Allowance (or, if you are under 60, the care component of Disability Living Allowance) while you are in residential care. This means that you will have extra income to contribute towards the weekly cost of your care, and will help reduce your progress towards the equity limit.

Effect on financial assessment

While a DPA is in effect the maximum ‘disposable income allowance’ used in your financial assessment will be £144 per week, although you may, if you wish, choose to keep a lower amount.

Contact information

For further information,
contact Adult Social Care Services on 01753 475111
or email adultsocialcare@slough.gov.uk