If you pay for your care, your money might be tied up in your home.

This counts towards the amount you pay for care if your spouse or some other relatives do not live there. But you have options to avoid selling your home.

You must decide if these options are right for you and always consider getting independent advice first.

Pay for care with a council loan secured against your home (Deferred Payment Agreement)

Deferred Payment Agreements

When you move into a residential care home on a permanent basis, we complete a financial assessment to work out a weekly contribution towards your care costs. The financial assessment is based on your income, capital and property.

If you meet certain requirements, the value of your property will be disregarded in your financial assessment for the first 12 weeks of your permanent placement into care. Your assessed weekly contribution would be based on your income and capital only. Please note all residents in permanent residential care contribute towards their care costs. Full details are contained in our fact sheet “Paying for Residential Care”.

If you have been assessed to pay the full cost of your care but can’t afford to pay because your capital is in your property, we may be able to offer you a Deferred Payment Agreement (DPA). This is a loan.

It’s different to other loans because;

  • your home is used to secure the money you borrow
  • no money is given to you
  • the difference between what you can pay from your income and the full cost of your care is paid by Dorset Council and secured via the loan

This would be a legal agreement with Dorset Council with a signed legal document. If your home is jointly owned, everyone will need to sign the agreement.

The agreement will explain your responsibilities and those of Dorset Council. A legal charge is then placed on your property, which is like a mortgage, to safeguard the loan. You will be asked to pay the costs incurred by us in setting up the agreement.

You will pay a weekly contribution towards your care from your income and other savings. This amount is worked out by an assessment of your finances and is explained in the information sheet ‘Paying for Care and Support Services’. We pay the part of your weekly bill that you can’t afford, until the value of your home is reached. The part we pay is your deferred payment.

Before entering into a DPA you may want to consider taking independent legal and financial advice. A DPA is one option to meet the cost of your care, but there may be other options available to you.

You can end the agreement at any time. For example, you may sell your home. The loan then becomes repayable immediately. Otherwise, the agreement ends upon your death. The loan is repayable 90 days after death. We can’t cancel the agreement without your consent.

We will send you a written statement of the outstanding loan for six monthly periods ending every June and December. We will also confirm the amount you owe within 28 days of you making a request.

Can I have a DPA?

If any of the following circumstances apply, it will not be possible for Dorset Council to secure a legal charge on your property and so a DPA could not be offered:

  • the property is unregistered – you will need to contact a solicitor to assist with the registration of the property with the Land Registry, which will incur a cost
  • the property is owned by more than one person – ALL joint owners will need to agree to a legal charge being placed on the property
  • the property is jointly owned with a deceased spouse – the ownership will need to be changed with the Land Registry. You will need to provide a copy of the relevant death certificate and ensure that the ownership is changed. A solicitor will need to do this
  • if there is already a charge on the property – the owner of ALL charges would need to agree to a further charge being placed on the property
  • if the person doesn’t have mental capacity regarding their finances, and there is no appointed Deputy or Power of Attorney – someone will need to arrange to be legally appointed to act for the person specifically to enter into the DPA
  • if there is insufficient equity in the property to ensure the cost of the care, plus interest for a two-year period from the date the agreement commences
  • the property is a park home – because your property is a park home we can’t secure a charge against it, unless you own the land which the park home is on

The advantages of a DPA

If any of these circumstances apply and you wish to be considered for a DPA, it’s extremely important that you start dealing with the issue as soon as possible.

Agreeing to a DPA allows you to claim Attendance Allowance (AA) or, if you are under 65 years old, the care component of Disability Living Allowance (DLA) or Personal Independence Payment (PIP) whilst you are in residential care.

You don’t have to sell your house whilst you are alive. If you choose a DPA we will discuss the outcome of the financial assessment, the cost of your care, the equity in the property (we will do an evaluation) and the costs to you in setting up and running the agreement.

If you have a DPA, you can keep more of the money you have coming in each week (your Personal Expense Allowance PEA). If you decide to keep more money each week, the extra money paid by Dorset Council to help fund your care will charged interest.

Can I rent out my property?

You may rent out your home and use part of the rental income to pay your care home fee. The advantages of renting out your property are:

  • the DPA debt will be lower
  • your property will be occupied
  • your tenant will pay utilities and Council Tax
  • the council will only take account of 80% of your gross rental income in the financial assessment – this leaves you with 20% to do as you wish with

If you choose to rent out your property or allow your property to be occupied by any person, you must first obtain written consent from us. You must also ensure that you have adequate landlord’s insurance which we agree is satisfactory, or the relevant empty property insurance.

If you rent your property, you need to show us the rental agreement and landlord insurance every year.

Top ups

If you choose a more expensive residential care home than we can purchase the care for, you can choose to add the amount to the deferred loan (if there is sufficient equity in the property). Alternatively, a top up for this extra amount would be required.

The options for a top up are:

  • first party top up – this is where you pay the extra amount in a separate agreement between the council and your care home out of your own savings or deferred against the property. We will assess if this is a suitable option and will only allow a ‘top-up’ to be included in the deferred payment if there is enough equity in your home. Should the placement continue to a point where the equity in the property has reduced to an extent where you become entitled to assistance with funding from the local authority, if you have chosen a placement which is more expensive than the local authority would agree to contribute towards, there is no guarantee that we will meet the full cost of the care in the future, if a third party is unable to meet the shortfall.
  • third party – often a close family member would agree to pay the top up for you from their savings or income. We will assess if this is sustainable option.

The cost of a Deferred Payment Agreement

Dorset Council charge a fee to set up a DPA, which reflects the actual costs the council incurs. There is also an annual administration charge which is calculated monthly and added to the account. The set-up charge and the annual charge can be added to your DPA but will also incur interest. These charges cover legal costs, land searches, registry and valuation charges. If you wish to pay the charges separately (and not include them in the loan), you will need to give us 14 days’ notice. Once this notice has taken effect, we will invoice you separately for the charges as they become due. If you do not pay the invoice within 28 days, the cost will automatically be added to the loan and interest will be charged on this from that date. You can ask for a breakdown of the charges at any time, and we will give you notice of any changes.

For up-to-date details of the fees involved in a DPA please contact the Deferred Payment Team on 01305 228762 or email us at deferredpayments@dorsetcouncil.gov.uk.

How to apply for a DPA

To apply for a DPA, you must:

  • have capital (excluding your house) of less than £23,250 (the upper capital limit)
  • be assessed by a care practitioner as requiring permanent residential/nursing care in a registered care home and be entering one
  • be the sole owner of the property or, if the property is held in joint or multiple names, the other owner(s) must agree to a legal charge on the property in favour of Dorset Council
  • ensure your property is registered with the Land Registry (if it isn’t, you must arrange for it to be registered at your own expense)
  • have a responsible person willing and able to ensure maintenance is carried out on the property to retain its value – you are liable for these expenses
  • insure your property at your expense – you may be asked to provide evidence that the property is adequately insured every year
  • have mental capacity to agree to a DPA or have a legally appointed agent willing to agree to this
  • the property must have been your main residence before going into residential/nursing care
  • there can be no other ‘beneficial interests’ on the property, for example outstanding mortgages or equity release schemes, unless this is approved by us.

How much can I borrow?

For a full fact sheet with all the information regarding DPA’s, please contact the Deferred Payments team for an application form on 01305 228762 or email us at  deferredpayments@dorsetcouncil.gov.uk.


Get advice on other ways to pay for care using your home

If you have to pay for a care home and money is tied up in your home, you have other options.

You should always consider getting independent financial advice before making any big decisions.

You can:

Pay for more expensive residential care with help from a third party

If you get financial help with your residential care from us, people you know (third parties) can pay extra for you to stay in more expensive accommodation.

How to make top-up payments for care

A third party can make ‘top-ups’ for your care if:

  • they show us the money that they have coming in and in accounts (a financial assessment)
  • the money does not come from your accounts as the person getting care
  • they agree to pay the extra cost for at least 2 years
  • they set up a direct debit to pay the top-ups every 4 weeks

If they ever stopped paying top-ups, this might mean you have to move out of a care home.

If you are interested in third party top-ups, speak to your adult social care worker.

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