Deferred Payment Agreements and Care Home Fees

Deferred Payment Agreements

A Deferred Payment Agreement is an arrangement where an individual can use their property as collateral to help towards the payment of care home costs, when they do not have sufficient capital assets to meet care fees.

The Care Act 2014 permits a Local Authority to offer a Deferred Payment Agreement where an individual is in long term care and holds a beneficial interest in a property.

A Deferred Payment Agreement is a legally binding contract whereby the Local Authority agrees to pay the fees on behalf of the home owner and places a charge against the property. The monies must be paid to the Local Authority when the property is sold or from the homeowner’s estate upon death.

The Local Authority can charge interest not exceeding 2.25% on the loan but cannot make a profit. Interest is only charged on the amount borrowed and not on the agreed lending limit which is usually set at around 90% of the value of the property.

To be eligible for a Deferred Payment Agreement the individual must:

  • Have moved in to long-term care
  • Own a home with equity
  • Have capital assets below £23,250 (not including the home or a private pension pot).

How can we help?

If you are resident in a care home, or are an Attorney or Deputy acting on behalf of a resident in a care home who is being asked to enter into a Deferred Payment Agreement, please contact Victoria Pugh on 01743 237668 or email v.pugh@hatchers.co.uk.