A deferred payment agreement can help when someone needs permanent residential care but much of their wealth is tied up in their home. Instead of selling the property immediately to pay care fees, an eligible person can ask the council to defer some of the charges and recover them later.
The arrangement is not free funding. The amount deferred becomes a debt, interest can be charged and the council may add administration or legal fees. But for the right person, a DPA can create time and flexibility at a difficult point.
What is a deferred payment agreement?
The Care and Support Statutory Guidance describes the universal deferred payment scheme. In broad terms, the council agrees to delay collecting some care and support charges and secures the debt, usually against the person’s property.
The government’s guidance says the scheme is intended to ensure that people should not be forced to sell their home during their lifetime simply to pay care costs.
Who may qualify?
Eligibility depends on the Care Act rules and the person’s circumstances. Typically, the person needs eligible care and support needs that are being met in a care home or qualifying supported-living arrangement, has a property that is taken into account in the financial assessment, has limited other accessible capital and can provide adequate security for the debt.
A council may also have discretion to offer an agreement more widely than the minimum mandatory criteria.
Do you have to sell your home first?
No. Avoiding an immediate sale is one of the main purposes of the scheme. However, a DPA does not mean the home can be ignored indefinitely without conditions. The council will set an equity limit, charge interest and require the property or other security to be maintained.
How does the 12-week property disregard fit in?
A person who first enters permanent residential care may qualify for a 12-week period during which the value of the former home is disregarded in the means test. That can provide time to consider a DPA.
Read our guide to the 12-week property disregard so you know what still has to be paid during that period and what to organise before it ends.
What can be deferred?
The amount that can be deferred depends on the care costs, the person’s assessed contribution from income, the value of the security and the council’s equity limit. Some people defer the council’s core care charges; in certain cases an affordable top-up may also be included.
Do not assume the agreement covers every cost connected with the care home. Ask for a written breakdown showing the weekly care-home fee, the amount the person must continue paying from income, the amount deferred, any top-up and all fees and interest.
Interest and administration charges
Councils are permitted to charge interest and administration costs for DPAs within the statutory framework. Interest can accrue while the agreement is running and can continue until the debt is repaid.
Before signing, ask for the current interest rate, how often it is applied, which fees are charged at the start and during the agreement, and an illustration of how the balance may grow over one, two and three years.
How is the property used as security?
Where a DPA is secured against a home, the council generally takes a legal charge over the property. This protects repayment of the debt when the property is eventually sold or the agreement otherwise ends.
The person remains the owner. But the legal charge affects what can be done with the property, so legal advice can be useful before signing, particularly where ownership is shared.
What if someone else lives in the home?
First check whether the property should be disregarded altogether. If a spouse, civil partner or another qualifying relative continues to live there, the home may fall within a mandatory property disregard, in which case a DPA may not be needed for that property.
Our guide on when a home is disregarded for care-home fees covers the main categories.
Can you rent the property out?
Possibly, but discuss the plan with the council and check the DPA terms. Rental income may be taken into account and can reduce the amount that needs to be deferred. The property also has to remain properly insured and maintained.
Landlord responsibilities, tax and practical management should be considered separately. A vacant-home insurance policy may not cover a rented property, and ordinary home insurance may not cover long periods of vacancy.
What happens if property prices fall?
The council monitors the available equity because it must avoid deferring more than can reasonably be secured. If the property value falls or the deferred balance approaches the agreed equity limit, the council may reduce or stop further deferrals.
That is one reason to request regular statements showing the amount deferred, interest added, fees and remaining equity.
Can the council stop a DPA?
The statutory guidance allows further deferrals to stop in certain circumstances, including when the person reaches the equity limit, breaches terms that cannot be resolved, or becomes eligible for different funding because the property starts to qualify for a disregard.
Stopping new deferrals does not automatically mean the whole existing debt becomes payable immediately. The repayment terms in the agreement still matter.
When is the debt repaid?
A DPA can end if the person chooses to repay, when the property or security is sold, or after the person dies. The full balance can include deferred care costs, accrued interest and authorised fees.
Families dealing with an estate should ask the council for a final statement rather than relying on an old balance.
What if the council says you are not eligible?
Ask for the decision in writing. Check which eligibility condition the council says is not met and whether it considered its discretion. If the issue is the financial assessment itself, first verify the capital figures and whether the property should be disregarded.
Our guide to a social care financial assessment that looks wrong explains how to check and challenge the underlying calculation.
What if savings are still above £23,250?
For 2026–27, England’s upper capital limit remains £23,250. A person with assessable capital above that figure is normally responsible for the full care-home cost, even before the property is considered.
Our guide to care-home fees and capital limits explains the thresholds and tariff-income rules.
Questions to ask before signing
Ask: What amount will be deferred each week? What must I continue paying from income? What interest rate applies? What administration and legal fees are charged? What is the equity limit? How often will I receive statements? Can a top-up be included? What happens if the property is rented? What insurance is required? What circumstances allow the council to stop further deferrals? How is the agreement repaid after death?
Keep the answers with the signed agreement and the financial assessment.
Do not transfer the house simply to avoid fees
Giving away property is not a reliable substitute for a DPA. A council can consider whether a transfer amounts to deliberate deprivation of assets. There is no fixed “seven-year rule” that makes a transfer automatically safe for social-care charging.
See our guide on deprivation of assets before acting on informal advice about gifting a home.
Bottom line
A deferred payment agreement can let an eligible person postpone some care-home charges instead of selling their property immediately. It is a secured debt, not a grant, so interest, fees, equity limits and repayment terms matter. Compare the DPA with any property disregard that may apply, ask for all costs in writing and make sure the underlying financial assessment is correct before signing.
Compare the agreement with the alternatives
A DPA is useful for some people, but it should be compared with the realistic alternatives. Those may include selling the property, using other savings for a period, renting the property, or using another lawful source of funds. Each choice has different costs, risks and practical burdens.
For example, renting can generate income but also creates landlord responsibilities, tax considerations, maintenance and periods without a tenant. Selling may remove those responsibilities but ends the option of keeping the property. A DPA preserves more flexibility but adds interest and secured debt. There is no universal answer; compare the actual numbers and the person’s priorities.
Ask for an annual statement
You should be able to see how the deferred balance is changing. Ask how often the council issues statements and make sure they show care costs added, interest, administration charges, payments credited and remaining equity. Check the statement against the care-home invoices and the agreed weekly contribution.
If the figures do not reconcile, raise the issue early. Small weekly errors can become substantial over a long agreement.
Capacity and authority to sign
A deferred payment agreement is a legal and financial contract. If the person lacks capacity to enter into it, someone acting for them may need appropriate legal authority, such as a registered property and financial affairs lasting power of attorney or deputyship. Do not assume that being next of kin automatically gives authority to sign a secured agreement.
Where capacity or representation is uncertain, ask the council what evidence it requires and obtain legal advice before committing the property. Sorting this out during the 12-week disregard can prevent avoidable delay later.
Get the full cost in pounds, not just percentages
Before signing, ask the council for a worked example using your actual weekly care fee and property value. It should show the amount you pay now, the amount deferred, the interest assumption, administration charges and the projected balance after a realistic period. Percentages can sound small while producing a substantial debt over time. A written illustration makes it easier to compare a DPA with selling, renting or using other funds and helps family members understand what the estate may eventually need to repay.
Practical point: Before completing the agreement, check who will deal with the property day to day. Someone may need to manage insurance renewals, repairs, post, utilities, security checks and access for valuations. Agreeing these responsibilities early can prevent a breach of the DPA terms or an avoidable reduction in the property’s value while the owner is in residential care.
Keep copies permanently.
