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A deferred payment agreement is a way of avoiding selling your house to pay for care fees whilst you are living in residential care or supported living accommodation. The council will pay your care fees to the provider.

A deferred payment agreement is a way of avoiding selling your house to pay for care fees whilst you are living in residential care or supported living accommodation. The council will pay your care fees to the provider.

The fees must be repaid either if you sell the house or 90 days after your death, whichever is sooner.

The council will take out a legal charge on your house.

Moving out of your own home can seem like a big step. It may seem like a substantial loss of independence.

Taking out a deferred payment agreement means that you can return to your own home if the new arrangements don't work out. This can build confidence in trying out something new. Remember though that your main or only home is disregarded in the means test anyway for the first 12 weeks that you become a permanent resident in a care home.

If there is someone living in the house but their occupation does not cause the property to be disregarded in the means test, taking out a deferred payment agreement is a way of allowing them to continue to live there. They will have to move out when the owner dies unless they or someone else are able to pay off the amount owed to the council.

It may be possible to rent out your home for a sum which, combined with your income, will pay most of your care fees. This can make a lot of sense, especially if there is a preference not to sell the house when the owner dies. But any residual fees secured against the property will still need to be paid upon death. 

A deferred payment agreement should ordinarily result in the council paying all of your care home fees including any amounts by which those fees exceed what the council would pay for care if it were meeting the fees itself.

However the council has discretion not to pay a top up where it considers that such a top up is not necessary. It may not pay a top up if the total fee means that the security offered by the property will not be sufficient.

 

A deferred payment is available if:

  • The council assess that you need to live in a care home and
  • You would qualify for financial support for care needs under the means test were it not for your ownership of an interest in what was your main or only home and
  • Your interest in the property offers sufficient security for the care fees the council will pay.

The council has discretion to offer a deferred payment arrangement if you are moving into supported accommodation and your house can provide adequate security.

Deferred payments are not available to avoid sale of second homes or homes owned for buy to let purposes. However the properties held in a buy to let business could be disregarded in any event under the business assets disregard.

It can be taken out if you are already living in a care home, for example if you have reached the means test threshold because you have spent your other assessable savings on care.

The council will charge interest on the sums accrued under the agreement.

The council can also charge their costs for setting up the agreement.

The council has discretion to require you to pay any sum by which your assessable income exceeds £144 per week.

The full terms of the deferred payment agreement should be set out in writing.

A person who lacks capacity to deal with their property and affairs will not be able to sign this agreement. A family member will not be able to sign the agreement unless they have a power of attorney, a deputyship or a Court of Protection order authorising them to sign the document.

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