Luton Borough Council

What are Deferred Payment Agreements?

A Deferred Payment Agreement is an arrangement with us which will allow you to use the value of your home to pay your care home fees.

This means you will not be forced to sell your home during your lifetime to pay for your care.

It is a legally binding agreement with full terms and conditions, which allows you to defer or delay paying some of the costs of your care until a later date. The costs deferred must be repaid in full in the future. We secure the amount being deferred by placing a legal charge against your property.

There is an administration fee for setting the arrangement up and you will be charged interest on any amount owed to us.

It is important to understand that if your financial assessment shows you are liable to pay your care costs the Council will invoice you and expect to be paid. A deferred payment agreement is just one way of paying for your care.

Choosing a deferred payment agreement is an important decision. To find out more about other options available, you should speak to a financial adviser or seek advice from an independent organisation to find the right choice for you.

Who is eligible?

Deferred payment agreements will suit some people’s circumstances but not all. You may be eligible for a deferred payment agreement if:

you are receiving care in a care home (or you are going to move into one soon) or, at our discretion, supported living accommodation including extra care housing
you own your own home and there is enough equity in the value of your home for the deferred payment agreement to last
you have savings and investments of less than £23,250 (not including the value of your home)

How much can I defer?

The amount you can defer will depend on the value of your home, which determines your ‘equity limit’.

The government recommends we use the value of your property, less any debt secured against the property, and deduct 10% (for selling costs) and £14,250 (the lower capital limit) when working out the equity in your property.

The limit on equity is to protect you from not having enough money to pay sale costs of the property (like solicitor’s fees,) and to protect us against a drop in housing prices and the risk that we may not get all of the money back.

What will a deferred payment agreement cost?

There are fees and charges linked to deferred payment agreements.

You will be charged:

a fee for setting up a deferred payment agreement (currently £240)
interest on any amount you are deferring
other fees - for example if the Council has to obtain an independent valuation of your property

You can choose to pay the fees and interest when they are charged, or you can add them to the amount being deferred. Any charges being made only reflect the actual costs incurred by us to provide the scheme.

If your partner lives in your home

If you need care in a care home but your partner lives in your home, then we will consider their circumstances as well as your own. We may exclude the value of your home when we assess your finances to work out how much you will have to pay towards the costs of your care.

If your partner has circumstances that mean we still include the value of your home when working out how much you can pay towards the cost of your care, you may still be able get a deferred payment agreement, as long as they sign the agreement too.

Can anyone else live in my home?

If no one else lives in your home, you could choose to rent your house out. It could be cheaper and easier if someone’s living there as you could use the rent income to reduce the amount you have asked to defer.

Your home must be maintained and insured for as long as the deferred payment agreement exists.

Can my application be refused?

We may refuse your application when:

we are unable to secure a legal charge on your property
you don’t own your home, or there is not enough equity in the value of that home for the Deferred Payment Agreement to last as long as needed
your property can’t be insured
you do not supply enough information to process your application
you do not agree to the terms and conditions of the agreement

Things to consider

a deferred payment agreement can give you time to put other arrangements in place for example it can be a bridging arrangement until you can sell your house or a long-term arrangement covering the whole time you need care
if you decide to make it a long-term arrangement it could give you peace of mind for the future
your property needs to be registered with the Land Registry to be eligible
you will need a responsible person willing and able to look after your old home, including keeping it in good repair and properly insured
the council does not give you a fixed sum of money upfront. The Council will pay your care fees on your behalf as and when they fall due. Interest is charged on the amount owed
you repay the loan when you sell your house or when you die
if other people have an interest in the property, all the owners will need sign up to the agreement so you should speak to them
this might be a good time to make arrangements for someone to make decisions on your behalf if you are not able to do it for yourself in future

Financial representation

Carers and families can help people to make decisions about their care and how to pay for it. If we are concerned that the person applying for the deferred payment agreement has difficulty understanding the agreement, then another person may need to represent them. This person must be properly authorised, with legal power of attorney.

Applying for a deferred payment agreement

You can find the Council’s deferred payment policy here:

Deferred Payment Policy

You can find the application form here:

Deferred Payment Scheme - Application form