Deferred Payment Agreements

A Deferred Payment Agreement (DPA) is a legal arrangement under the Care Act 2014 between you and your local council. The council pays your care home fees on your behalf and secures this debt against your property. The debt — plus interest — is repaid when the property is sold, usually after you die or move permanently to another arrangement.

A DPA solves a common problem: your home is your largest asset, but it may be disregarded initially. If it is then counted in the financial assessment, you may not have the liquid savings to pay care fees without selling your home urgently. The DPA gives you (and your family) more time and control over when and how the property is sold.

You can repay the debt at any time — for example, if you sell the property voluntarily or receive an inheritance. You do not have to wait until death.

Your council must offer a DPA if all of the following apply:

1. You are in, or moving to, a care home.
2. Your property is not currently disregarded (for example, no qualifying person is living there).
3. You have capital (excluding your property) of less than £23,250.
4. Your property is in England and there is no legal reason it cannot be used as security (e.g., it is not subject to a charge that takes priority).

Councils also have the power to offer DPAs in other circumstances at their discretion — for example, to people with capital slightly above £23,250 who would face hardship without one.

A DPA does not affect your entitlement to Attendance Allowance or other benefits, though the council will take all income into account when calculating your weekly contribution.

The council charges interest on the accumulated debt at a rate set by the government — currently based on the Office for Budget Responsibility's 15-year gilt rate plus 0.15%, reviewed in January and July each year. Interest is compound, meaning it accrues on the total outstanding balance including previously accrued interest.

The council can also charge a one-off arrangement fee and may charge for ongoing administration. These charges must be set out clearly in the DPA documentation before you sign.

The total debt (fees + interest + charges) cannot exceed the net equity in your property. The council will carry out a valuation and will not lend beyond the "equity limit" — usually 70% of the property's value — to ensure there is enough to repay the debt from the proceeds of sale.

To apply for a DPA, contact your local council's adult social care department. The council will assess your eligibility and, if approved, will arrange a solicitor to register a legal charge against your property at HM Land Registry. You will need to provide details of the property, any existing mortgage, and proof of ownership.

You should seek independent legal advice before signing a DPA. Some councils will reimburse a contribution towards legal costs.

Once the DPA is in place, you should receive regular statements showing the accumulated debt. You can choose to make voluntary payments at any time to reduce the total owed. The DPA can be ended voluntarily by repaying the debt in full.

When the property is eventually sold, the proceeds must first repay the council's charge. Any remaining equity passes to your estate as normal.