Maria Richards, Consultant for Setfords Solicitors Residential Property team explains what a Deferred Payment is and how it can reduce concerns over a loved one going into a home.
Currently, there is no cap on the amount of care home fees you will pay, however there is a threshold in place where your capital will be assessed and, if you are below this threshold, the local authority may cover the full cost of your care. The threshold is currently £22,250 as a higher limit and £14,250 as a lower limit.
On 21st September 2021, the government set out a plan for adult social care in England capping adult social care costs. From October 2023 the Government will introduce both a new £86,000 cap on costs and also an increase in the threshold for capital to £100,000 when looking at whether state funding is available.
Capital Invested in a home
When conducting their assessments, any equity in the person’s home will be considered. This often means that a property has to be sold in order to pay the care home fees. This can be distressing to the care home resident as well as their family members, particularly if they wish the property to remain in the family.
How can you delay selling the property?
The Local Authority may be prepared to enter into a Deferred Payment Agreement.
This is where the Local Authority will pay the fees to the care home until such time as the property is sold. This will be assessed on the weekly care charge (the fees payable to the home), the value of the property (limited to 90%) less £14,250 and what equity the owner has. For instance, if they own it with someone else (a child who doesn’t live at the property) or there is an existing mortgage or equity release against the property.
Not everyone is entitled to a Deferred Payment Agreement and you should make enquiries of your Local Authority who can confirm your eligibility.
What is the role of a Conveyancer with a Deferred Payment Agreement?
The Deferred Payment Agreement will be accompanied by a Charge which will be secured against your property, much in the similar way that a high street mortgage would be.
By signing a mortgage, you have various responsibilities which extend to repair and maintenance of the property as well as the payments due. Your Conveyancer will advise you upon the terms of the Deferred Payment Agreement and the Charge will also discuss with you the implications of signing the Charge. We can ensure you are aware of any payments that will be due including interest on the sum borrowed along with any other costs that may be incurred.
It is important that you understand the implications as the Local Authority can instigate repossession proceedings for failure to comply.
What can we do if the homeowner find this too stressful or has lost capacity?
Provided the homeowner has a valid Power of Attorney, it is possible for both the Agreement and the Charge to be signed by the attorney. If the homeowner does not have a valid Power of Attorney, a deputy can be appointed to sign but this involves an application and process through the Court of Protection.