Deferred payment agreements for care fees
A deferred payment agreement lets you pay care home fees from the value of your home later, rather than selling it now. This guide explains how the council scheme works.
A deferred payment agreement is a council scheme that lets you delay paying care home fees by securing them against your home. The council pays your fees and recovers the money later, usually when the property is sold or after death, placing a legal charge on the home. It is available to people whose capital, apart from the home, is below the upper limit. Interest and administration fees apply, so the amount owed grows over time.
At a glance
- What it isCouncil scheme to defer fees against your home
- Run byYour local authority
- SecurityA legal charge on your property
- RepaidWhen the home is sold or after death
- InterestYes, set by a government formula, plus admin fees
- Main eligibilityOther capital below 23,250 pounds (England, 2025/26)
What is a deferred payment agreement?
A deferred payment agreement, sometimes shortened to DPA, is an arrangement with your local council. The council pays your care home fees on your behalf and you agree to repay it later from the value of your home. It places a legal charge on the property as security, much like a mortgage, and recovers what it is owed when the home is sold, which is often after death.
The point of the scheme is to stop people having to sell the family home in a hurry to pay for care. This guide is for families and individuals; the figures are for England for 2025/26.
Who is eligible?
Deferred payment is mainly for people who own a home but do not have much other capital to pay fees from. The exact criteria are set nationally and applied by your council, but the broad tests are these.
- You are moving into, or already in, permanent residential care
- You own a home that is counted in the means test
- Your other capital, apart from that home, is below the upper limit of 23,250 pounds (England, 2025/26)
- There is enough equity in the property to secure the deferred fees
Interest, fees and how the debt grows
A deferred payment agreement is not free. The council charges interest on the growing balance, set by a government formula and reviewed regularly, and can charge administration and legal fees for setting up and running the agreement. Because fees are added every week and interest accrues, the amount owed builds up over time, and is then repaid in one go from the property.
| Feature | How it works |
|---|---|
| Care fees | Added to the deferred balance each week the council pays them |
| Interest | Charged on the balance at a rate set by a national formula |
| Admin and legal fees | The council can charge for setting up and running the agreement |
| Repayment | The whole balance is repaid when the home is sold or after death |
The pros and cons
A deferred payment agreement can be a sensible way to keep the family home and avoid a forced sale, but it is not free money and the debt against the house grows. Weigh it against the alternatives for your situation.
| Pros | Cons |
|---|---|
| You do not have to sell your home now | Interest and fees mean the debt grows over time |
| The home can sometimes be rented out | A legal charge is placed on your property |
| Fees are paid while care is arranged calmly | The balance reduces what is left for your estate |
Your local council runs the deferred payment scheme and can tell you whether you qualify and what the interest and fees would be. For wider funding choices, including whether a deferred payment, an annuity or equity release suits you, speak to an FCA-authorised care-fees adviser. We provide information and referrals, not regulated advice.
Deferred payment agreements for care fees: common questions
What is a deferred payment agreement?
It is a council scheme that lets you delay paying care home fees by securing them against your home. The council pays your fees and recovers the money later, usually when the home is sold or after death, placing a legal charge on the property as security.
Who can get a deferred payment agreement?
Broadly, people moving into permanent residential care who own a home counted in the means test, whose other capital is below the upper limit of 23,250 pounds (England, 2025/26), and where there is enough equity in the property. Your council confirms eligibility.
Do you pay interest on a deferred payment agreement?
Yes. The council charges interest on the growing balance at a rate set by a national formula, and can add administration and legal fees. Because fees are added weekly and interest accrues, the amount owed builds up until it is repaid from the property.
When is a deferred payment repaid?
Usually when the home is sold or after death. The whole balance, including the care fees the council paid, the interest and any fees, is repaid in one go from the value of the property.
Is a deferred payment agreement a good idea?
It can be a sensible way to keep the family home and avoid a forced sale, but the debt grows over time and reduces what is left for your estate. Compare it with other options and take advice. Your council explains the scheme; an authorised adviser can compare the alternatives.
Need help with your own situation?
We can introduce you to an FCA-authorised care funding specialist who will look at your circumstances and the options.