Paying for support (what we charge)

Deferred Payments Scheme

What is a Deferred Payments Scheme?

A Deferred Payment Scheme is an arrangement with the council that will help some people to use the value of their homes to pay for their care home costs.

It 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.

Deferred Payments Scheme will suit some people’s circumstances better than others’. If you are still living in your own home, you will not need a Deferred Payments Scheme.

A Deferred Payments Scheme is only one way to pay for care home costs.

To find out more about the options available, you can speak to a financial adviser or seek advice from an independent organisation.

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 the 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.

How much will it cost me to set up my Deferred Payments Scheme?

There are administrative costs associated with setting up a Deferred Payment Scheme. We currently charge £583.00 which is simply what it costs us to set it up for you.
You will also need to meet the cost of getting your property valued.
If you decide to take a Deferred Payment Agreement, our legal department will write to you about these charges.

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.

Benefits of the scheme include:

  • guaranteed rent payments, even if your property goes vacant
  • no commission fee
  • the lease is between you and us (not you and the tenant)
  • we give you a cash lump sum of up to £1,750 in the first year
  • we find tenants for you and manage the ongoing relationship with them we make sure your rent is paid on time
  • if you need your property returned to you, it will be in the same condition, allowing for reasonable wear and tear
  • we cover your Council Tax and your water rates
  • variable length lease agreement are available with a minimum of one year

If you want to discuss this option contact Kingston Council's Private Sector Leasing Team on 020 8547 5491.

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.

Staywell (the new name for Age Concern Kingston upon Thames) may be able to help you access information about local independent financial advisors (see contact details below).

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

There can be no other beneficial interests on the property, for example outstanding mortgages or equity release schemes, unless this is approved by the Council.

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.

Where can I get independent advice?

Staywell (the new name for Age Concern Kingston upon Thames) may be direct you to independent advice.

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 or post at the below address:

Adult Social Care Finance Team
Royal Borough of Kingston upon Thames
Third Floor, Guildhall 2
Kingston KT1 1EU