Deferred Payment Arrangement Application Service
You may have read in the news recently that the ‘Care Cap’ has been delayed until at least 2020.
You may now believe that this will stop councils having any responsibility to provide support on care services for people with a good income and/or capital investments.
Not true, as there is one programme that has been retained that can help preserve the investment you have built up in your home, leaving more inheritance for your children should you need to move into residential care.
A Deferred Payment provided by your local council could enable you to rent out your property whilst providing you with a level of income that should support you to fund your own care.
You control the purchase of your care without a reliance on council funding.
What is a Deferred Payment Agreement?
A deferred payment agreement is an arrangement with the council that will enable people to use the value of their homes to help pay care home costs. If you are eligible, the council will help to administer your care home bills on your behalf. You can delay repaying the council until you choose to sell your home providing an opportunity to earn rental income.
A deferred payment agreement means that people should not have to sell their home in their lifetime to pay care home bills.
How Does it Work?
By entering into a deferred payment agreement, a person can defer or delay paying the costs of their care and support until a later date. Local authorities must offer them to people who meet the following criteria and who are able to provide adequate security for the. Anyone:
- Whose eligible needs are met by the provision of residential care
- Who have less than £23,250 in assets excluding the value of their home (i.e. in savings and other assets); and
- Whose home is not occupied by a spouse or dependent relative
The local authority will set out the terms and conditions of the agreement, for example a requirement to insure and maintain the property.
Generally, the amount that can be deferred will be determined by 3 factors:
- The amount of equity a person has available in their property
- The total projected care costs
- The amount a person is contributing to their care costs from other sources, such as pension income.
Local authorities will obtain a valuation of the property and reasonable property valuation costs are included in the list of administration charges that local authorities can pass on to people. Administration charges are also likely to include legal and ongoing agreement running costs.
Local authorities can charge interest on the amount deferred, the interest rate being no greater than that set nationally by the Government Office of Budget Responsibility. The maximum interest rate for the period 1 July 2015 to 31 December 2015 is 2.25%.
What Can You Save by having a Deferred Payment Arrangement?
According to a recent publication by Age UK the average length of stay in a residential home is 15 months with 27% of people going on to live there for more than 3 years.
Using an example of a 2 year residential stay (midpoint) for a UK care home placement of £600 per week the total costs for the duration would be £62,500.00. It is assumed that £100 per week is contributed from pension income towards this cost.
In addition the average price for a 3 bedroom property is £200,000 with projections for this to keep rising in value by 3% per year providing a total yield for the 2 year duration of £12,000
This example demonstrates that 60% of the residential care costs can be funded without selling your property.
*assuming £150 per week is contributed from rental income to reduce the level of the loan
This represents a preservation of the estate of nearly £31,000 just from using the scheme.
*The above table ignores any other form of welfare income that remains the same regardless of whether you take up the deferred payment arrangement. It also does not take into account income tax or other forms of taxation which will vary depending on personal circumstances.
How Can Valuing Care Help?
People tell us that accessing information and support from the Council is a difficult process which appears to be more onerous for those presenting themselves as “self-funders”.
In addition Councils are not readily advertising the availability of the Deferred Payment Arrangement.
Valuing Care has created a standard Deferred Payment Arrangement application service for helping self-funders access the Deferred Payment Arrangement scheme. This includes support with filling in the financial assessment forms, the administration fees that will be payable by you to your local Council, calculating the best way of preserving your estate, access to independent financial advice and approved letting agents.
All of the employees of Valuing Care have direct experience of working in the field and can support you through the application procedure. They will be on hand to deal with any of the paperwork at a time where the most important aspect is finding the right care for your loved one and helping them settle in.
What does it Cost?
Valuing Care’s application support service is FREE to all self-funders who use one of the approved letting agents: all promoted by VCFM because of their understanding of the Deferred Payment Arrangement. scheme.
Alternatively if you wish to use your own letting agent or not rent the house at all (the house price inflation still makes applying for the scheme worthwhile) then Valuing Care charge a one off support fee of £500.
Help keep your estate and ensure you don’t have to move to a Council funded placement by letting Valuing Care help you apply for the deferred payment arrangement today.