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Deferred Payments - A Guide

The system of Deferred Payment Arrangements (DPAs) was introduced by the Care Act 2014, and is a scheme provided by local authorities. A typical person who applies for a DPA is someone who needs full-time residential care and has been assessed as needing to pay for the full cost of this, but who does not have easy access to capital as their main asset is the value of their home. A DPA means that a local authority will (and in some cases must) pay for the costs of your care in a care home, with the promise, in the form of a charge registered at the Land Registry, that they will be paid back when the house is sold or when you pass away. The aim of a universal deferred payment scheme is “that people should not be forced to sell their home in their lifetime to pay for their care”.

Frequently asked questions

You must have been assessed as having care and support needs that are to be met by the provision of care in a care home. Additionally, the value of your savings and capital excluding the value of your home must be below £23,250.

Yes, it can, although usually the only reason for refusal would be if the local authority could not obtain adequate security against the value of your home (such as if there is a mortgage already outstanding, or the property uninsurable). If your DPA application is refused, you should seek specialist advice as there may be avenues of discretion that could be applied.

When your house is sold or when you pass away, whichever comes first. There is no requirement to sell your home in your lifetime, but your executors will need to sell your property when you pass away to pay the local authority back, and they have 90 days to do so.

Yes, they do. Remember that only the value of your share in the property can be assessed. If there is someone else living in the property who meets the criteria for a mandatory disregard (for instance someone who is over 60), the value of the property will be ignored and a DPA will not be necessary. If, however, someone is living in the property and there are no grounds for a mandatory disregard, we would advise that you seek specialist advice, as there are discretionary disregards available in certain circumstances.

There are Land Registry charges, land search fees and administration charges to be paid to the local authority, and some authorities also charge interest on the amount deferred but this cannot be more than the government-approved standard rate. In effect this means that the interest rate charged is much lower than under equity release schemes. Local authorities are not allowed to profit from DPAs; they must be run on a “cost-neutral” basis.

It means that you do not need to sell your home during your lifetime to pay for your care. You can also choose to rent your property out, which means that the amount you defer against the value of your home is less (it is unlikely that rental income will entirely cover the cost of care, but if it does then this is an alternative to a DPA). It is cheaper than other options such as equity release. It also means that if you choose to, you can pay for a care home that is more expensive than one that a local authority would normally pay for.

It can be – it depends entirely on your circumstances. If you require support based upon your individual circumstances, please contact a member of our specialist team, who can offer advice and support on a fixed-fee basis


Team members

Debbie Anderson
Solicitor | Managing Director | Head of The Health and Community Care Team
Judy Timson
Clinical Adviser
Sharon Edwards
Legal Assistant

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