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The right to a Deferred Payment Agreement in England was introduced by the Government in 2015. Similar arrangements exist in Scotland and Wales. In Northern Ireland, there is no formal deferred payment system, but it might still be available, your client can contact their View - Health and Social Care Trust.
If your client is moving into a care home and most of their money is tied up in their home, your client’s local authority might offer them a DPA, which is a long-term loan. It means the local authority will help to pay the care costs until the property is sold or the homeowner dies. At this point, the loan is repaid. The local authority must be paid within 90 days of the date of death or the date the property or asset is sold or disposed, whichever is sooner.
Anyone entering a DPA is still allowed to keep some income to pay for any costs they may incur maintaining the home. This is called the Disposable Income Allowance (DIA) and is set at £144 a week.
Eligibility for a deferred payment agreement (DPA) varies across the UK. In England, the qualifying conditions for a person applying are:
Typically, your client can’t use more than 70% - 80% of the value of their home to pay for fees.The local authority will take any pension income and certain benefits towards the cost of care into account before calculating the shortfall. The local authority should also ignore the value of any property for the first 12 weeks and help with funding during this period, so the agreement usually begins when someone has been in a care home for 12 weeks or more.
A legal agreement will be put in place with the local authority and they'll usually put a legal charge on the property to ensure the money owed in care fees will be repaid.
Information researched and accurate as of October 2022. Not to be relied upon by advisers or their clients.
This website is designed to give professional financial advisers information and tools that they can use to help control and develop their business and should not be relied upon by private investors or any other persons.