What is a deferred payment agreement?
Short answer
An arrangement letting you delay paying care home fees using the value of your home, secured by a legal charge like a mortgage. The council pays the fees and recovers them with interest when the property is eventually sold. Councils must offer one where you meet the criteria.
A Deferred Payment Agreement stops a care home move forcing an immediate house sale. The council pays your fees, registers a legal charge over the property, and recovers the accumulated debt plus interest when the house is sold — normally after death or when you choose to sell.
Who qualifies
- You are moving permanently into a care home and own a property.
- You have less than £23,250 in non-property assets.
- The property has adequate equity, and is not already disregarded because a qualifying person lives there — a spouse or partner, a dependent child, or a relative aged 60 or over. Where it is disregarded, you should not need a DPA at all.
Where the criteria are met the council must offer a DPA; it is not discretionary. Apply through adult social services and expect a valuation and a charge to be registered.
The costs and conditions
Interest accrues at a government-set rate that changes twice yearly, so it is not fixed — the paperwork must state the current rate and how it can change, and councils may add administrative charges. You must keep the property maintained and insured throughout, and you generally need the council’s consent before anyone lives in it, since occupation can affect value and saleability.
Councils set an equity limit, often around 70% of the value, and should warn you as the debt approaches it. If it is reached, they may require repayment or a different arrangement — but the debt is secured on the property, and the council cannot pursue you personally for a shortfall beyond the net equity.
Practical points people miss
- An empty home may qualify for a council tax exemption while you are in residential care. It is not always applied automatically — ask the council tax department.
- The DPA itself does not affect benefits, but living permanently in a care home does: Housing Benefit stops after 52 weeks, and means-tested benefits are assessed differently. Get a benefits check before the move.
- If you return home permanently, the DPA ends and the debt becomes payable — talk to the council early about repaying it over time.
Related guides
Deferred Payment Agreements
A Deferred Payment Agreement (DPA) is an arrangement with your local council that allows you to delay paying some or all of your care home fees until after your death or when you choose to sell your home. It prevents you from having to sell your property immediately to fund care.
5 min
Deferred Payment Agreement: How the Council Pays Care Costs Until You Sell
A Deferred Payment Agreement (DPA) is a loan from the local council that pays your care home fees while you keep your home — and is recovered from the eventual sale or your estate. It removes the pressure to sell a family home quickly under duress. DPAs are available to most homeowners in residential care. This guide explains who qualifies, the interest rate, and the alternatives.
9 min
Care Home Fees Overview
Care home fees vary widely across England, typically ranging from £700 to over £2,000 per week depending on the type of care, location, and quality of the home. Understanding what the fees cover, how council-funded rates compare to self-funder rates, and what top-up fees are can help you make informed choices.
7 min
Financial Assessment (Means Test) in Detail
After a care needs assessment finds eligible needs, the council carries out a financial assessment (means test) to determine how much, if anything, you contribute towards the cost of your care. The rules are detailed and some assets are disregarded — understanding them helps ensure you are not overcharged.
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