Deferred payments (what will happen to my home?)

A Deferred Payment must be offered to you, if you meet the criteria set out below:

• You have been assessed as requiring 24-hour care, and this is to be provided in a care home, Supporting Living or an Extra Care accommodation; and
• You own a property which was your former main or only home; and
• Excluding the value of this home, you have capital less than or equal to the upper capital threshold; and
• If the value of your former main or only home, is not disregarded, details of when a disregard can be considered can be found at Property Disregard Sheet in financial assessment [pdf document].
• Your loan is able to be secured by way of a legal charge being placed on your property in favour of Darlington Borough Council

In most cases we will only consider offering a Deferred Payment Agreement on the property which is your former main or only home.  

You must have either a beneficial or legal interest in the property. The property should be registered with the Land Registry Department in either your sole name, joint tenants or as tenants in common.

There should be sufficient equity in your share in the property to cover the costs of a minimum of 12 months care home fees.

Darlington Borough Council is able to secure their loan by way of placing a legal charge against your property.

The deferred payment must be agreed to and the agreement signed by you or your legal representative e.g. an Attorney or Deputy. See the 'Do I have to pay to enter into a Deferred Payment Agreement tab below for more information on mental capacity and deputyship.

It is recommended that anyone entering in to a Deferred Payment Agreement should seek Independent Regulated Financial Advice.

You will be asked to pay an initial set up administration fee, schedule of charges [pdf document] and an independent valuation will be required for  the property, the Council can arrange this for you or you can arrange it yourself.  These will be payable at the time the charge is placed against the property and the Deferred Payment Agreement is entered into, however, you have the choice to add these fees to the loan.

This fee covers the Council's legal costs and disbursements involved in drawing up the agreement, carrying out searches and placing the legal charge against your property.

Interest will also be applied to the Deferred Payment.  This is set nationally by the Department of Health and Social Care and is reviewed every six months, usually in July and January of each year.  This interest will be compounded when it is added to the accruing debt.

If you decide that you do not want to enter into a Deferred Payment Agreement and the value of your property exceeds the upper capital limit, the Council will assess you as being able to able to pay for your care fees in full.

If the person receiving care lacks capacity to make decisions regarding their finances, there must be a legally appointed representative to make decisions on their behalf.  This must be someone that holds either a registered Enduring Power of Attorney for Property and Financial Affairs, a Lasting Power of Attorney for Property and Financial Affairs or a Deputy appointed by the Court of Protection.

The Council is unable to offer a Deferred Payment Agreement until someone is appointed to act legally on their behalf. Making financial decisions on someone else's behalf.

Darlington Borough Council may refuse a Deferred Payment if:

• We cannot place a legal charge on your property. This could be if you already have a legal charge on your property due to an existing mortgage or equity release scheme and this prohibits another charge being placed on the property; OR
• There is insufficient equity available in the property.

 OR

• You do not have capacity to make decisions and if you do not have a Person legally appointed to act on your behalf, for example an Attorney or Deputy for Property and Financial Affairs. More information is available on the making financial decisions on someone else's behalf page.

OR

• Where you do not agree to the terms and conditions of the agreement, for example a requirement to insure and maintain the property.

OR

• If your property or land is unregistered and you are unable to prove ownership. OR
• A co-owner or interested party do not give their consent to the creation of a legal charge on the property.

The treatment of the property will then be considered in line with Darlington Borough Council's Charging Policy for Care and Support.

If you have been assessed as needing a care service. Social care, unlike health care is not a free service.

A financial assessment is needed to decide if you are eligible for any financial assistance from the Council and also what you can afford to contribute towards your care.  It is a means tested assessment, based on your income, capital, savings and relevant expenditure.  Financial assessments are completed by a member of the Financial assessment team,

For more information please see the financial assessment section.

This assessment will establish what your contribution will be from the start of your Deferred Payment Agreement, which will be reviewed annually. We will consider your total weekly income and savings and leave you with the 'Disposal Income Allowance' as set out in the fore mentioned charging policy.

This allowance is to cover your weekly personal expenditure and also to cover the costs of insuring and maintaining your property whilst you are in the care home. You may decide that you do not want to take the full amount of the Disposal Income Allowance, instead reducing the amount of your accruing, weekly debt to the Council. However, as a minimum you must retain at least the weekly amount of the Personal Expense Allowance.

During the Deferred Payment Financial Assessment, the financial assessment officer will advise you of any benefits they feel you may be entitled to when on a Deferred Payment.  

You or your legal financial representative will be responsible for applying for such benefits and for notifying the Department for Work and Pensions of any changes in your circumstances. Likewise, should there be any changes in your income or benefits; it is your responsibility to notify the Care Contribution Assessment Team of any such changes.

The Financial Assessment Team will complete a certain number of preliminary checks and enquires as follows:

1. Ownership,
   In order to confirm you are the legal / beneficial owner the Council will complete a land registry search to confirm ownership. If your property is registered it will confirm if you are either of the following:
   

• • Sole ownership
    Is if you own your property outright, with no other owners.
    
    
  • Joint Tenants
    This is where you own the property with one or more other people, and when one joint tenant dies that person's share automatically passes to the survivor(s). This means that you cannot leave your share of the property to someone else in your will.
    
    
  • Tenants-in-Common
    This is where the property is owned by 2 or more persons, and each person can leave their share in the property to whomever they chose in their will. Property held as tenants in common may be suitable for a Deferred Payment Agreement in certain circumstances and the Council will consider each case on its own merits. If the co-owner is deceased and probate is currently being administered, the Council will require additional information and the property, if unregistered, may have to be registered with Land Registry before the agreement can be entered in to, or the registration may need to be amended/updated before we offer an agreement. Please note the Council will not cover any related costs in doing this. In all cases, written informed consent of all co-owner(s) and any other person with an interest in the property will be required agreeing to the legal charge being placed against the property and this charge taking priority to and ranking before their interest in the property.
    
    If a Deferred Payment is not appropriate, then the persons share in the property will be considered in the financial assessment as a capital asset and if that share exceeds the upper capital limit the person will be required to pay the full costs of their care.
    
    
  • Unregistered Property
    If the property is unregistered and you are unable to prove ownership, you may be refused a Deferred Payment Agreement, until such time that the property is registered.
    
    
  • Requirement of Co-Owner(s') & Interested Parties Consent Where the property that is to be the subject of the Deferred payment Agreement is co-owned or there is another interested party, for example, there is a tenant or lodger in the property, we will require in writing genuine and informed consent of each co-owner and/or anyone else the Council considers has an interest in the property/land confirming their understanding and agreement that your entering into the agreement will lead to the creation of a legal charge taking priority to and ranking before any interest the person has in the property/land which will be the subject of the charge. If we are unable to place a charge against the property, the persons share will be considered and treated as a capital asset and taken into account in line with Darlington Borough Council's Charging Policy for Care and Support which may result in the person being assessed as being able to meet the full cost of their care.

2. Disregards
   There are specific circumstances when the value of your property will be disregarded. See Property Sheet HYPERLINK for full details of such circumstances.

3. Valuation
   You will be asked to provide an independent valuation of the property.   The council can arrange this on your behalf, but you will be required to pay for this valuation.

4. Equity
   In order to determine if we are able to offer a Deferred Payment Agreement and if so how much, we need to calculate your share of the equity available in the property.
   
   This is calculated as shown below:
   
   Value of your share, less 10% (sale costs), less any outstanding loan/mortgage, less lower capital limit  = total amount of equity available.

This is the maximum the Council will loan up to, this is called your 'Equity Loan Limit'

This is illustrated below:

This amount will be reviewed regularly and subject to change to reflect the current market position.

After all these preliminary checks have been completed a member of the Financial Assessment Team will be in contact with you with a view to providing you with an offer.  

Should you accept the Council's offer you will be asked to sign a Deferred Payment Agreement and its terms and conditions.

In some circumstances the Council may consider other forms of security providing this security gives the Council adequate protection. Each case will be considered on its own merits, but the Council reserves the right to refuse any other form of security.

The Deferred Payment Agreement sets out various contractual requirements on you and the Local authority as parties to the agreement. These are detailed in the agreement but are set out in brief below.

Your responsibilities include, but are not limited to the following:

• You must notify the Council of any changes in your income or capital during the lifetime of the agreement.
• You must notify the Council of any changes to your need for care and support, as these may affect the assistance the Council may be able to provide.
• If your property has not been disregarded for the purpose of your financial assessment, you must inform the Council of any changes that may mean that the property subsequently falls to be disregarded.
• You must ensure that you always have adequate buildings insurance on the property, even if the property is empty and ensure that any terms required by the insurer are met. The Council may wish to see verification of this from time to time.
• You must agree to adequately maintain the property whilst you are in a care home, to ensure it is in a good state of repair. If you are not able to do this yourself, you must have in place an arrangement for regular maintenance to take place. You may wish to appoint someone to oversee this on your behalf and you will need to inform the Council who you have appointed.
• You must obtain consent from the Council before allowing someone to move into, the property after the agreement has been made. We will require from any such person their written consent and understanding that the legal charge on the property, in favour of the Council, will take priority to and ranking before any interest the person has in the property.
• You must inform the Council if you decide you wish to sell the property and keep it fully informed as to the progress of any sale.

The Deferred Payment Agreement sets out various contractual requirements on you and the Local authority as parties to the agreement.

The Council's responsibilities are set out in brief below:

• The Council must provide you with a written statement at the end of the initial six month period and then six monthly thereafter, detailing how much you would have to pay the Council in order to terminate the agreement on the date the statement is sent or such later date that you may request, including any administrative fees and interest applied in addition to advising you of the equity remaining with a projection as to how quickly this will deplete up to your equity limit.
• The Council must provide you with an up to date statement within 28 days of your request, which must be done in writing to: Financial Assessment Team, Darlington Borough Council, Town Hall, Feethams, Darlington. DL1 5QT or via email to [email protected]. The Council will look again at the valuation of your property or chosen form of security once the amount which has been deferred has exceeded 50% of the security and adjust the equity limit according and keep this under review if the value has changed. The Council will give 30 days' written notice on the date of which you are likely to reach your equity loan limit.

There are certain circumstances where your agreement will not end but your care fees temporarily cease to accrue as part of your debt. However, the debt that has accrued so far will still be subject to interest.

 These circumstances are listed below:

• You reach your maximum equity loan limit.
• In most cases the Council will only disregard the value of your property where a qualifying relative (as defined in Property Disregards) has been continuously occupying the property as their only or main home prior to you entering long term care. In certain circumstances the Council may consider disregarding the value of your home should a qualifying relative (as defined in Property Disregards) move into your property after you have entered long term permanent care. The Council will, however, need to consider the reason why this person has subsequently moved into the property and each case will be looked at on its own merits.
• You become eligible for Continuing Health Care funding via the NHS. Whilst this is in place the Council will not be assisting with your care fees. At this time your care fees will temporarily cease to accrue as part of your debt but will still attract interest. You may choose to continue to make contributions from your income during this time, which will reduce the amount outstanding.
• The Council may choose to stop deferring your care costs, if the terms of the agreement are breached, for example, the property fails to be adequately maintained or insured. In such cases, a new financial assessment will need to be completed and the remaining equity will be treated as capital which may result in the person being assessed as being able to pay for their care fees in full.
• You are subsequently assessed as no longer needing 24 hour care. A new financial assessment will be completed in such cases in line with Darlington Borough Council's Charging Policy for Care and Support, depending on what if any care and support the person then receives.

A Deferred Payment Agreement can be terminated in 3 ways:

• At any time, you or someone acting on your behalf, can repay the full amount due
• When the property (or form of security) is sold, and the Council is repaid on the completion of sale.
• Or the Council is repaid from the person's estate.

The charge is only removed once the full amount of the accrued debt has been repaid to the Council. On receipt of the repayment, the Council will authorise its Legal Services Division to instruct the Land Registry to release the charge. This can take between 7 and 10 days to remove. The charge can also be removed on completion of the sale of the property, following confirmation from your solicitor.

If you are unhappy in the first instance, please contact a member of Financial Assessment Team, who will discuss your concerns with you.

If you still feel that your concerns have not been resolved, then the Councils complaints process is available to you. For more information, please see the Darlington Borough Council's Adult Social Care complaints procedure.

In the majority of cases a Deferred Payment Agreement will only be offered against your former main or only home, in some cases the Council may choose to apply its discretion whereby a loan is agreed and secured against another form of asset, such as land. In both circumstances, the agreement is exempt from the Consumer Credit Act as per Article 72G(4) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, where both types of Deferred Payment Agreements (secured, and not secured, on land) are to be supplied by a Local Authority and fall within one of the definitions contained in Article 2(2) of European Council Directive 2008/48/EC.

Darlington Borough Council supports the objectives of the Data Protection Act 1998 and is registered as a data controller. Information that you provide will be governed by the requirements of the Data Protection Act 1998 and may be processed by the Council in the performance of its statutory duties or for purposes required by law. More information is available at Darlington Borough Council.