10. Deferred Payment Agreements (DPAs)
Deferred Payment Agreements (DPAs) are a way of making sure you are not forced to sell your home during your lifetime to pay for care, and to give you more flexibility about your care-funding options.
The ‘Care and Support (Deferred Payment) Regulations 2014’ set out the situations in which the Council must offer a DPA and where the Council may offer a DPA. These regulations are set in accordance with the Care Act 2014 Sections 34 and 35.
A DPA is generally only available to people who:
- Have identified needs assessed as being best met in a care home on a permanent basis, and
- Have been assessed to pay the full fees of care home accommodation because of property they own that takes their capital assets above the upper capital limit.
The Council have taken a decision that DPAs are only available to those in residential care.
This policy only applies to DPAs entered into after the 6 April 2020 any agreement entered into on or before the 6 April 2020 will continue under the terms and conditions of your existing agreement.
A DPA will not be offered if you own your own home AND have capital or assets (including other property) above the upper capital limit. In this case you are considered to be able to fund your own placement without the need to involve the Council for funding the Council can still provide you with an assessment, information and advice.
A DPA is an agreement between you and the Council, where the full payment for your care charges are ‘deferred’ (put off to a later date) and paid in the meantime by the Council – provided you can offer the Council a form of security (a legal charge against your property). The money you owe to the Council for your care charge is then repaid to the Council when your home is sold, or from your estate, or from a third party at the end of the agreement.
If your financial assessment shows you can afford to pay a charge from your income and other capital assets towards your care charges you will be required to pay your assessed charge throughout the term of the DPA. This will lower the amount of the deferred charges to be repaid to the Council at the end of the DPA. A financial assessment will be carried out in accordance with the statutory guidance.
If you accept the offer of a DPA with the Council, you will charge administration fees towards the costs of setting up and monitoring the DPA. You will also be charged interest on the charges that you defer from the start of the DPA.
You are eligible to apply for a DPA if all points below apply to you:
- Your care assessment shows that your identified needs are best met in a care home
- The total of your other capital assets (not counting your home) are below the upper capital threshold
- The property is registered at the Land Registry
- The value of the property capital provides adequate security to the Council
- The Council can secure the DPA through a first legal charge against your property
- You own and have a legal and beneficial interest in your home
- Any other person with a legal and/or beneficial interest in your home is willing and able to sign the required legal documents
- The Council considers you have appropriate property insurance arrangements in place
- You have capacity to enter into a DPA or you have a legally appointed representative to enter into a DPA on your behalf
Security is obtained by placing a legal charge against the property.
Whilst it may be possible to secure the deferred payment agreement against the property whether that security is adequate is a question of fact. The Council must be satisfied that the equity in the property is sufficient to pay the likely Deferred Payment amount.
The Council considers sufficient equity to allow for payment of the care and support costs for three years provides adequate security.
This is calculated on the amount of equity available to you, less 10% and £14,250, and taking into account any assessed weekly care charge.
- You own 75% of a property
- Property is valued at £1,500,000
- Your available equity is £150,000 less £14,250 and 10% = £120,750
- Your care and support costs £900 per week
- Your income based assessed weekly care charge is £250 per week
- The deferred amount is therefore £650 per week
- £120,750 divided by £650 = 220 weeks
- 185 weeks is 3.6 years there is sufficient available equity.
If the equity available to you in the property is less than the amount required to pay for care and support for three years, it will be at the Councils discretion whether to enter into a deferred payment agreement and the same may be refused.