Deferred Payment Agreements in Nottinghamshire: Using Your Home to Fund Care Without Immediate Sale

When a loved one needs care home support but their main asset is their home, the prospect of selling the family property quickly can feel overwhelming. Deferred Payment Agreements (DPAs) offer a way to delay this decision, allowing Nottinghamshire County Council to pay care home fees on your behalf whilst securing the debt against your property for eventual repayment.

Understanding how the deferred payment scheme works in Nottinghamshire, who qualifies, and the costs involved helps families make informed decisions about using their house to pay for care without the pressure of immediate sale.

What Is a Deferred Payment Agreement?

A Deferred Payment Agreement is a loan from your local authority to help pay care home fees when your main asset is property. Rather than being forced to sell your home quickly to fund care, Nottinghamshire County Council pays the care home on your behalf, and you repay this amount (plus interest and fees) when your property is eventually sold.

The scheme exists specifically to prevent people having to sell their homes under pressure whilst they or their family arrange care. It recognises that property sales take time and rushing the process often results in lower sale prices and additional stress during an already difficult period.

DPAs are not grants or free money. They are loans secured against your property, similar to a mortgage. The council becomes a creditor with a legal charge on your home, and the debt must be repaid, usually when the property is sold after a death or if you move permanently into care.

Who Qualifies for a Deferred Payment Agreement in Nottinghamshire?

Not everyone is eligible for a DPA. Nottinghamshire County Council applies specific criteria:

Property ownership: You must own property (or have a beneficial interest in property) in England that will be used to repay the loan. This is typically your former home.

Capital threshold: Your non-property assets (savings, investments, etc.) must be below £23,250. If you have significant savings alongside your property, you must use these first before qualifying for a DPA.

Entering permanent care: You must be moving into a care home permanently. DPAs aren’t available for temporary respite stays.

Property must be suitable security: The property must have sufficient value to cover the care home fees being deferred, plus interest and charges. Nottinghamshire County Council will arrange a valuation to confirm this.

Property cannot be occupied: Your property must be unoccupied, or occupied only by certain people. If your spouse, partner or certain relatives (like dependent children or dependent relatives over 60) still live there, the property is disregarded in your financial assessment and a DPA isn’t appropriate.

You must be assessed as needing care: Nottinghamshire social services must have assessed you as requiring care home support. Self-funders who haven’t had a needs assessment cannot access DPAs.

No existing charges preventing DPA: If your property already has substantial debts secured against it (mortgages, equity release), these might prevent a DPA if insufficient equity remains.

How Deferred Payment Agreements Work in Nottinghamshire

The process involves several steps:

Step 1: Initial Discussion

Contact Nottinghamshire County Council’s Financial Assessment Team on 0300 500 80 80 to discuss whether a DPA might be suitable. They’ll explain the scheme and check basic eligibility before you commit to the formal application.

Step 2: Formal Application

Complete Nottinghamshire’s DPA application form, providing:

• Details of your property (address, estimated value, any mortgages or charges)
• Information about other assets and income
• Confirmation of your care home placement
• Permission for the council to obtain a property valuation

The application should be made as early as possible, ideally before or immediately after moving into the care home.

Step 3: Property Valuation

Nottinghamshire County Council arranges for an independent valuation of your property. You will pay for this valuation and it will be added to your DPA debt (typically between £150 and £300).

The valuation determines the equity available (property value minus any outstanding mortgage or secured loans). Nottinghamshire County Council will usually agree to defer up to 80-90% of the available equity, keeping a buffer to cover potential property value changes, accumulating interest and sale costs.

Step 4: Agreement Terms

Once approved, Nottinghamshire County Council will provide written terms including:

• Maximum loan amount: How much they’ll defer in total
• Interest rate: The rate charged on the deferred amount (see below)
• Administration fee: An upfront fee for setting up the DPA
• Your contribution: What you must pay from your income

You’ll need to take independent legal advice before signing. Nottinghamshire requires confirmation from a solicitor that you understand the agreement.

Step 5: Legal Charge Registration

Nottinghamshire County Council registers a legal charge against your property at the Land Registry. This protects their loan and ensures they’re repaid when the property is sold.

Step 6: Ongoing Payments

Nottinghamshire County Council begins paying the care home fees directly. You contribute from your income (pension, benefits) leaving you with the Personal Expenses Allowance of £31.15 per week. The council pays the difference between your contribution and the care home fees.

The amount deferred accumulates as debt against your property, with interest added regularly.

Costs of Deferred Payment Agreements

DPAs aren’t free. Nottinghamshire County Council charges:

Interest: DPAs accrue interest on the deferred amount. As of 2024/25, Nottinghamshire County Council charges interest at the maximum rate set by the government (currently 4.55% annually, though this changes). Interest is calculated daily and added to your debt.

Administration fee: A one-off setup fee to establish the DPA and register the legal charge. For Nottinghamshire, this is typically around £585 (though fees are reviewed annually).

Ongoing administration: Some councils charge annual administration fees. Check current charges when applying.

Valuation costs: The initial property valuation fee (typically £150-£300) is added to your debt.

Legal costs: If Nottinghamshire County Council incurs legal costs related to your DPA, these may be added to the debt.

These costs mean your debt grows faster than just the care home fees being deferred. For example:

• Care home fees: £900 per week
• Your contribution: £200 per week (from pension)
• Nottinghamshire defers: £700 per week
• Interest at 4.55% per year also accumulates on the growing debt

Over time, this adds up significantly. If you’re in care for several years, the debt can become substantial.

Your Ongoing Contributions

Even with a DPA, you still contribute towards care costs from your income:

Pension income: The majority of your state and private pensions goes towards care fees

Other income: Benefits (except certain disability benefits initially), rental income, or investment income contribute to fees

Personal Expenses Allowance: You keep £31.15 per week for personal spending on toiletries, clothing and small purchases

Nottinghamshire County Council calculates your weekly contribution based on your financial assessment, and this contribution is reviewed if your income changes.

Protecting Property Value: Your Responsibilities

Whilst Nottinghamshire County Council holds a charge on your property, you remain the owner with certain responsibilities:

Buildings insurance: You must maintain comprehensive buildings insurance and provide proof to the council

Property maintenance: The property should be maintained in reasonable condition. Allowing it to deteriorate reduces its value and the security for the loan

Utility charges: Council tax, utilities and other property expenses remain your responsibility until the property is sold

Security: Take reasonable steps to secure the property against vandalism or squatters

If you fail to maintain insurance or allow the property to deteriorate significantly, Nottinghamshire County Council can take action to protect their interest, potentially forcing a sale.

When the Deferred Payment Agreement Ends

DPAs conclude in several circumstances:

Death: When you die, the DPA debt (accumulated care fees, interest and charges) is due. Your estate must repay Nottinghamshire County Council, usually by selling the property. The remaining proceeds go to your beneficiaries.

Property sale: If you or your family decide to sell the property whilst you’re still alive, the DPA debt must be repaid from the sale proceeds.

Maximum loan reached: If the deferred amount reaches the agreed maximum (usually 80-90% of your property equity), no further fees are deferred. You’d need to find another way to pay fees (from property sale proceeds) or apply for full local authority funding if your remaining assets now fall below £23,250.

Moving out of the care home: If you move out of the care home (for example, returning home or moving to another property you own), the DPA terms specify what happens. Usually, the debt becomes repayable.

Voluntary repayment: You can repay some or all of the DPA debt at any time without penalties.

Selling Your Property During a DPA

Many people enter DPAs intending to sell their property but wanting time to do so properly rather than in crisis. You can sell your property at any time during a DPA:

1. Instruct an estate agent and solicitor
2. Inform Nottinghamshire County Council of your intention to sell
3. When the sale completes, your solicitor pays the outstanding DPA debt
4. Remaining proceeds either go to you (if you’re still alive) or your estate

Selling the property releases you from ongoing interest charges, so if you don’t need to keep the property for sentimental reasons or future family use, selling earlier rather than later reduces the total debt.

Alternatives to Deferred Payment Agreements

DPAs aren’t the only option for using your house to pay for care:

Selling the property immediately: Avoids interest charges and provides funds upfront, but can feel rushed and pressured

Equity release: Taking out a lifetime mortgage or equity release product whilst you still have mental capacity might provide funds for care, though these products have their own interest charges and costs

Family loans: Some families lend money to pay care fees, with repayment from the eventual property sale, avoiding local authority involvement

Renting out the property: If the property can be rented, this generates income towards care fees, though becoming a landlord has its own responsibilities and costs

Continuing to self-fund: If you have sufficient savings alongside property equity, you might pay care fees from savings first, accessing local authority funding only when savings deplete below £23,250

Each option has advantages and disadvantages. Independent financial advice can help you compare them.

Making the Decision: Is a DPA Right for You?

Deferred Payment Agreements suit some situations better than others:

DPAs work well when:

• You want time to sell your property without pressure
• You’re waiting for probate or property legal matters to resolve before sale
• Family members want to try to buy the property but need time to arrange finances
• You have minimal other assets and can’t pay care fees whilst waiting for property sale
• You’re uncertain about long-term care needs and want to keep options open

DPAs might not be suitable if:

• You have significant non-property assets and can pay fees without the property
• Your spouse or partner still lives in the property
• Your property has very high mortgages or charges leaving little equity
• You have mental capacity to arrange equity release, which might offer better terms
• You’re happy to sell the property immediately

The accumulating interest means DPAs become expensive over time. If you’re likely to be in care for many years, the interest charges can be substantial.

Tax Implications

Deferred Payment Agreements have potential tax implications:

Inheritance Tax: The DPA debt reduces the value of your estate, which might reduce inheritance tax liability if your estate exceeds the nil-rate band (currently £325,000)

Capital Gains Tax: Usually doesn’t apply to your main residence, but if the property has been rented or used for business, there might be implications

Income from property: If you rent the property during your care home stay, rental income is assessed as part of your contribution to care fees

Speak to an accountant or tax advisor about your specific circumstances.

Getting Independent Advice

Before entering a Deferred Payment Agreement, Nottinghamshire County Council requires you to receive independent legal advice. This protects you by ensuring you fully understand:

• The agreement terms
• How interest accumulates
• Your ongoing responsibilities
• When the debt becomes repayable
• The implications for your estate

Many solicitors in Nottinghamshire offer this service. The cost (typically £200-£500) can usually be added to your DPA debt.

Independent financial advice is also valuable, particularly if you’re comparing DPAs with other options like equity release. Ensure any financial advisor is regulated by the Financial Conduct Authority and specialises in later-life planning.

Common Questions About DPAs in Nottinghamshire

Can I get a DPA if my property is jointly owned?: Yes, if you own the property as tenants in common and your share provides sufficient equity. If owned as joint tenants, the property passes automatically to the co-owner on death, which complicates DPA repayment.

What if my property is worth less than expected?: If the valuation is lower than anticipated and insufficient equity exists to cover potential care costs, the DPA may be declined or may have to be agreed to defer a smaller amount.

Can family members pay off the DPA early?: Yes, anyone can repay some or all of the debt at any time, releasing the property from the charge.

What if I want to change care homes?: DPAs aren’t tied to specific care homes. If you move to a different care home (at the same or different cost), the DPA continues with adjusted amounts being deferred.

Do DPAs affect benefits?: Most benefits are already assessed when calculating your care home contribution, so the DPA itself doesn’t affect benefits. However, if property is sold and proceeds become available, this capital would then be assessed.

Contact Nottinghamshire County Council

To discuss Deferred Payment Agreements or apply for one in Nottinghamshire:

Financial Assessment Team
Telephone: 0300 500 80 80
Email: enquiries.asch@nottscc.gov.uk
Online: www.nottinghamshire.gov.uk/care/adult-social-care

The team can explain current interest rates, fees, and whether you meet eligibility criteria. Start this conversation early, ideally before or immediately after a care home placement is confirmed.

Care Home Funding in Mansfield and Nottinghamshire

At Lidder Care, we work with families navigating all types of care home funding, including Deferred Payment Agreements. Our homes in Mansfield and Kirkby-in-Ashfield accept residents funded through DPAs with Nottinghamshire County Council.

Whilst we can’t provide financial advice, our team understands how DPAs work in practice and can discuss how they apply to our care home fees. We’ll work with you and Nottinghamshire social services to ensure the arrangement is set up correctly.

If you’re exploring care options whilst considering how to use your property to fund care, visit our homes to discuss your situation. Call 0330 223 6600 or visit liddercare.com to arrange a visit and talk through funding options, including how Deferred Payment Agreements work with our homes.