Deferred payment agreements

In 2015 deferred payment agreements (DPAs) were introduced by the Government, its intended to ensure that people weren't forced to sell their home to pay for their care home bills1. 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.

Someone who can’t pay their long-term care fees can apply for a DPA, which is a long-term loan from their local authority that is secured against their home. 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. 

The Disposable Income Allowance

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.

What is the criteria for qualifying?

Eligibility for a deferred payment agreement (DPA) varies across the UK. In England, the qualifying conditions for a person applying are:

  1. Receiving long-term care in a care home or soon will be.
  2. Financially assessed as having less than £23,250 in savings, other than their property or pension pot.
  3. A homeowner of a property that isn’t occupied by a spouse, partner, dependent child or a relative aged over 60, or someone who is sick or disabled.

Your client can't usually use more than 90% of the value of their home, though many local authorities set a lower limit between 70% and 80%. 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.

Our sources

1 View - Gov.uk 

2 View - Which? 

View - Money Advice Service 

Information researched and accurate as of February 2020. Not to be relied upon by advisers or their clients.