Deferred Payment Scheme

Instead of getting a fixed amount of money like a normal loan, the council will pay the care home directly. This means you can pay the council back later when you sell your property.

This could mean you don't have to sell your property while you are alive.

If accepted on the DPS, the council will put a charge on your property to make sure they get their money back. They will also add interest to the loan.

You will still need to pay towards your care costs from your income while using the DPS.

It's important to get financial and legal advice before you apply for the DPS.

To apply for the deferred payment scheme

• you need to have had a care act assessment that says you need to be in a care or nursing home permanently
• you must have less than £23,250 in savings and investments
• you own part or all of a property that was your main or only home
• you have written permission from any joint owners of your home - only your share of the property can be used as equity for the loan
• you must be able to make your own financial decisions. or you need to have a legally appointed person who can make decisions for you (power of attorney / court appointed deputy)
• you must have enough equity in your home to cover at least 12 months of care fees
• you need to keep the property in good condition so that it does not lose value
• you must ensure that there is buildings insurance for your property - you may need specialist insurance to cover a property that is not occupied

If accepted to the DPS

• you must contribute towards the cost of your care home fees from your income.
• the amount you will need to contribute will be determined by your financial assessment
• you must engage in all financial reviews
• you must provide all information requested at any time
• you can keep up to a maximum disposable income of £144.00 per week
• if you keep less disposable income you will reduce the rate of accruing debt
• you must keep the minimum disposable income allowance which is set by the government – this is currently £30.15 per week

If you are eligible, there are two options available to you:

• charging style - on your behalf, the council will pay your care home fees to your care home provider. You delay repaying us until your property is sold.
• loan style – the council will loan you the money in order for you to pay your care home fees direct to your care home provider. You delay repaying us until your property is sold.

Both options will require you to enter into a written agreement with the Isle of Wight Council and a charge will be placed on your property.

When you apply for a DPS you will need

• a completed application form (contact us to request one)
• photo identification of you or your legal representative - a passport or driving licence, certified by a professional
• original property deeds if your property is not registered with the Land Registry
• proof of legal status for your financial representative - power of attorney or court appointed deputy
• death certificates for anyone still named on the title deed of the property
• property valuation from an estate agent - an independent valuation is required to ensure the valuation is accurate. Fees apply.

A financial assessment will be carried out by the Financial Assessment and Charging Team. You will be required to pay a weekly contribution towards your care fees from your income and savings.

The council will pay your care fees until the money from your property (equity) is available. The part we pay is called your ‘deferred payment’.

The deferred payment accrues as a debt against your property. When your property sells you must repay any fees owed to the Isle of Wight Council. The debt can be paid from another source when available.

You may request a deferred payment as a short-term measure while the sale of the property is being completed or as a longer term arrangement. The council can only agree to a deferred payment following a full financial assessment.

By entering into a deferred payment, you are consenting to the council placing a legal charge on your property. The council can refuse a request for a deferred payment. We must give the reason for refusal in writing to you.

Renting out your property may give you enough income to cover the full cost of your care. Advantages of this

• you will not accrue a debt
• you will not be liable for interest and administrative charges
• your property will be occupied
• your tenant will be paying utilities and council tax so you don't have to

If the rental income does not cover the whole cost of your care fees, you may still apply for a DPS. You will need to contribute at least 80% of the rental income you receive. You will need to pay this to the council as part of your financially assessed contribution. By doing this you will reduce the accruing debt.

No letting / rental agreement should be entered into before the deferred payment is agreed and signed. A copy of any proposed tenancy agreement must be approved by the council’s Legal Services Team. The property may only be let on an assured 6-month short hold tenancy. You will need to provide a copy of the tenancy agreement each time it is reviewed or updated to the council.

If there is an existing tenancy / rental agreement in place on the property, you should seek legal advice before applying for the DPS.

A residential or nursing home may request a higher price for a placement than the council can to pay.

You can request this extra amount to be deferred along with the other deferred costs. This is only considered if there is enough equity in your property. The visiting financial assessment officer will discuss your individual circumstances with you.

If accepted on to the DPS, you will receive a statement of the outstanding debt every 6 months.
This will keep you informed of the amount of the debt accruing. It will also include any deferred fees or charges such as arrangement fee, annual fees, land registry fees, valuation fees.

The council may revalue your property annually and / or when the outstanding debt reaches 50% of the available equity in your property. You will be responsible for the valuation fee. You can request that this fee is added to the deferred costs.

Note: fees, charges and interest will be added on top of the equity limit.

The amount you can defer will depend on the value of your home. As a guide, most people can use around 80-90% of the equity available in their home. The limit on equity is to protect you from not having enough money to pay sale costs like solicitor’s fees. It also protects the council in getting the money back once the property has sold.

A full review will be carried out once the equity in the property reaches 70%. The Council can decide to continue with the DPS until 90% of the equity has been used.

If your ‘equity limit’ is reached, you will be contacted by someone in the Financial Assessment and Charging Team. They will advise you of the date this happens. At this point, the council will no longer add full cost fees to your debt. You will still be charged your client contribution which is based on your income.

Interest, fees and charges will continue to be added to your outstanding debt held with the council until the debt has been repaid in full.

If your deferred payment has a top-up attached to it, you may need to move to a room or home that does not require a top up. A third party could decide to pay this top up for you. You should contact your social worker to discuss this once you have been told when your equity limit will be reached.

You can end the DPS at any time, but you must then pay back the full debt straight away. If you do not choose to end the agreement, it will end when you pass away.

The council can end the deferred payment if

• you fail to continue to meet the terms of the written agreement
• you no longer meet the criteria to have your needs met in a residential or nursing care setting
• the equity available in the property reaches 90%

When the DPS ends, the debt is repayable and interest and fees are charged until the debt is repaid in full. If the debt owed is not repaid in a timely manner, the amount owed to the council could be more than what the property is worth.

If your property is sold, the debt is repayable immediately. If you pass away, the debt is repayable within 90 days. The council’s usual debt recovery procedures will begin to recover the debt.

The council will only remove a legal charge on the property once all outstanding debts have been repaid.