What is the deferred payment scheme?
The deferred payment scheme is for homeowners permanently moving into residential or nursing care who either:
- Don't wish to sell their home immediately.
- Are unable to sell their home quickly enough to pay for care.
The value of your property is normally included when we calculate how much you'll need to pay towards your care.
As part of the scheme, we'll contribute to agreed care costs on your behalf, and you'll repay us at a later date when your property is sold. This is similar to a loan.
Eligibility for the deferred payment scheme
To join the deferred payment scheme:
- You must have been assessed by us as needing permanent residential or nursing care.
- You don't have any other assets or savings of £23,250 or more, not including your property.
- You agree to us placing a legal charge on your property and to sign any associated deferred payment agreement.
- If you co-own the property and wish to join the scheme, all of the other co-owners need to formally agree to this in writing.
- You must have the mental capacity to understand and sign the documentation, or you've given a relative, friend or solicitor authority to do this for you.
- If you've given someone else authority to sign documents for you, they must be formally appointed as either:
- Enduring power of attorney.
- Lasting power of attorney for property and financial affairs.
- Court-appointed deputy for property and affairs.
How to join the deferred payment scheme
If you're planning to permanently live in a residential or nursing home following a care assessment and are thinking about joining the deferred payment scheme:
- We recommend that you talk about this decision with relatives or friends, and seek independent financial and legal advice.
- Talk with your Adult Social Care case worker about joining the deferred payment scheme. They'll help you apply for the scheme.
- You can tell us you want to join the scheme when you're first assessed or at any time after while your property remains unsold.
- Applications to join the scheme can't be backdated. You can only be considered for the scheme from the date you apply, not when your care started.
- If your application is successful, a contract will be sent to you. This will tell you the payment to be made under the terms of the agreement.
How does the deferred payment scheme work?
When you go into permanent residential care:
- The value of your home is normally ignored for the first 12 weeks of your stay while we calculate charges. This 12-week disregard period should give you time to decide whether you want to stay in care permanently without feeling pressure to sell your home immediately.
- You'll still need to make a weekly contribution towards the costs of your care during the 12-week disregard period, but your financial assessment will be based on your income and other capital.
- At the end of the 12-week disregard period, if you've not been able to sell your home or don't want to sell, you can apply for a deferred payment.
- If you haven't sold your property, you might not qualify for as much pension credit (if you're aged 60 and older) or income support (if you're aged 59 and under) which will increase the amount of the loan. You'll continue to receive attendance allowance and/or Personal Independence Payments as long as you're eligible.
- The remainder of the costs of your care will be paid by us. This is known as a deferred payment.
- Any care costs we cover as part of the scheme will need to be paid back when your home is sold or when you leave residential or nursing care.
- You'll be sent a statement every 6 months showing the value of the outstanding debt owed to us.
How much will a deferred payment cost?
There will be an upfront fee of £724 which covers our valuation of the property and all legal fees.
The money must be repaid either:
- When the property has been sold.
- When you terminate the agreement.
- When you die.
Interest is charged throughout the period of the loan and the debt becomes payable 90 days after the contract is terminated.
The interest rate for deferred payment debts is 4.65 per cent. The interest rate is reviewed in January and July each year.
If the loan remains unpaid 90 days after the agreement ends, we'll instigate debt recovery proceedings.
What will happen to my property while on the deferred payment scheme?
A legal charge will be secured against your property. This gives us the right to reclaim the loan when it's sold.
You won't be able to transfer ownership of the property until the loan has been repaid in full.
You'll need to maintain your property while you're on a deferred payment agreement. This includes continuing to pay the insurance and making sure that the property is properly heated to prevent damp.
Can I rent out my property while on the deferred payment scheme?
You can rent out your property while on the scheme.
You'll need to use your rental income to contribute towards your care home costs and this may reduce the size of your loan.
10 per cent of any rental income will be disregarded in your financial assessment. This money must be used for maintaining the property and other landlord-related costs.
How is my property valued?
We'll use a Royal Institute of Chartered Surveyors valuer to obtain a valuation before the start of the agreement and every year after that.
If you don't agree with the valuation, you can pay for an independent valuation.
I want to know more about the deferred payment scheme
Every case is different and there are many different aspects of deferred payments.
If you have any questions about the deferred payment scheme and how it may affect you, please get in touch using the contact details on this page.