Paying for support (what we charge)

Deferred Payments Scheme

Deferred payment agreements (DPA)

The Deferred Payments Scheme  is designed to help those who have been assessed as having to pay the full cost of their care home costs but who cannot afford to do so because most of their money is tied up in their home. If you qualify for the Scheme, we will help to pay your care home bills. You can delay repaying us until you choose to sell your home, or until after your death.

How does the Deferred Payments Scheme work?

In practical terms, the Scheme offers you a loan from Kingston Council using your home as security. It does not work in exactly the same way as a conventional loan – we do not give you a fixed sum of money when you join the Scheme, but pay an agreed part of your weekly care home bill for as long as is necessary.

You will pay a weekly contribution towards your care home bill that you have been assessed as being able to pay from your income and other savings. We pay the part of your weekly charge that you can’t afford until you sell your home.

The part we pay is your ‘Deferred Payment’. The deferred payment builds up as a debt which is cleared when the money tied up in your home is released. For many people this will be done by selling their home, either immediately or later on. You can also pay the debt back from another source if you want to.

However, you do not have to sell your home if you don’t want to. You may, for example, decide to keep your home for the rest of your life and repay what you owe out of your estate, or you may want to rent it out to generate some income.

If you do this, you will be expected to use the rental income to increase the amount you pay each week, and so reducing the weekly payments made by us, and minimising the eventual deferred payment debt.

What interest will I have to pay?

We will charge you a small amount of interest on the amount owed to us in the same way as money borrowed from a bank. This interest is set to cover the council’s costs and not to make a profit.

The maximum interest rate that we will charge is fixed by the government and is based on the cost of government borrowing. It will change on 1st January and 1st July every year.

We currently charge an interest rate of 1.45%. This interest will be compounded on a weekly basis and will apply from the day you join the Deferred Payment Scheme. Compound interest is interest added to the principal of the loan so that the added interest also earns interest from then on. We will send you regular statements advising you how your charge is being calculated and what the outstanding sum on your deferred payment account is.

Your agreement with us

If you decide to use the Deferred Payments Scheme, you will need to enter into a legal agreement with us and sign an agreement document. We then place what is called a ‘legal charge’ on your property to safeguard the loan. You will be charged £620 for this.

The agreement covers both our responsibilities and your responsibilities. One of your responsibilities is to make sure that your home is insured and maintained. If you run up expenses in maintaining your home while you are living in a care home, these will be allowed for in the amount that you are assessed to contributing each week from your capital (savings, stocks, shares, investments or other assets) and income.

You can end the agreement at any time (for example if you sell your home) and the loan then becomes payable immediately. Otherwise, the agreement ends on your death and the loan becomes payable 90 days later.

We cannot cancel the agreement without your permission.

What are the advantages of using the Deferred Payments Scheme?

The main advantage of a deferred payment is that you don’t have to sell your home immediately if you need to go to a care home. You can take your time to decide where you want to go and then think about what you might want to do with your home later once you are settled.

You should take independent financial and legal advice to help you decide which course of action is best for you.

A deferred payment is also useful if there is an existing agreement for a third party to ‘top up’ the cost of care. A ‘top-up’ is where a family member or other person (a third party) puts additional money towards your care home costs. If you decide to take advantage of the Deferred Payments Scheme, you can add the cost of the ‘top up’ payments to your Deferred Payments Scheme loan, if we agree that there is enough equity or value in your home. 

The government’s rules say that ‘top ups’ for people not using the Deferred Payments Scheme currently have to be paid for by somebody else, for example, a member of their family. So an advantage of using a deferred payment is that you can use it to pay the 'top up' yourself without depending on a third party.

What other ways are there of paying for care home costs?

Renting out your property

You could choose to rent out your property, which could give you enough income to cover the full cost of your care home. There are advantages to this as you will not build up a debt, or have to pay interest and administrative charges and your property will be occupied. Your tenant will be paying Utility Bills and Council Tax which will reduce your outgoings.

We operate a scheme where people can become landlords and rent their accommodation to us. The scheme is called the Private Sector Leasing Scheme (PSL). Two to three bedroom properties are ideal for this.

The scheme is well established and already has many people using it to pay for their care. It is a hassle free way to rent your property and may be a good option for you to consider. 

Under the PSL Scheme you can receive a guaranteed rental income from the Council and have the peace of mind that the Council are managing your property.

Equity Release Schemes

There are also various equity release products which may be suitable for your personal circumstances.

Equity release is the name given to a range of products that let you access the equity (cash) tied up in your home if you are over the age of 55. You can take the money you release as a lump sum or, with some schemes, several smaller amounts.

Other ways

You may also choose to pay the full cost of your care from your available income and savings/assets, or a family member may choose to pay some or all of this for you.

You should take independent financial and legal advice to help you decide which course of action is best for you.

Who can apply for a Deferred Payment Scheme?

To apply you must:

  • have capital (savings, stocks, shares, investments or other assets but  excluding property) of less than £23,250

  • be assessed by a health or social care professional as needing permanent residential  or nursing care in a registered care home

  • own or have part legal ownership of a property, which is not benefitting from a property disregard, which is registered with the Land Registry (if the property is not, you must arrange for it to be registered at your own expense)

  • have the mental capacity to agree to a Deferred Payment Agreement or have a legally appointed agent willing to agree this

While in the agreement, you will also need to:

  • have a responsible person willing and able to make sure that you pay for any necessary maintenance to your property to keep its value

  • insure your property at your expense

  • pay your contribution in a timely and regular manner. If you fail to pay your contribution on a regular basis the council reserves the right to add this debt to the loan amount

Acceptance of any application under the scheme is subject to you meeting the criteria for joining the scheme, and Kingston Council being able to obtain security in your property.

Please talk to your Social Worker if you would like to join the scheme. A Deferred Payment Scheme application form will then need to be completed together with an Adult Social Care Services Financial Assessment form and returned to us by email [email protected]

or post.

Adult Social Care Finance TeamRoyal Borough of Kingston upon ThamesThird Floor, Guildhall 2Kingston KT1 1EU

 

Independent financial advice 

In addition the society for later life advisers can provide independent advice to anyone who   may require care and support 

Sources  of Further Information 

The Care Act 2014 and its accompanying Regulations and the Care and Support Statutory Guidance can all be accessed through the gov.uk website. The Care and Support Statutory Guidance includes specific chapters on the subject of charging, together with more detailed guidance in Annexes A – F. 

The Council’s charging Policy provides information regarding the financial assessment process for both residential and non residential care services. 

Age Concern  factsheet 40 provides some useful information regarding  deprivation of assets. All Age concern Fact sheets are available to the public.