Deferred Payments Scheme
Supplementary Guidance
2012/13
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London Borough of Richmond upon Thames
Deferred Payments Scheme
1.
Background
The Council operates a Deferred Payments Scheme under Section 55 of the Health and Social
Care Act 2001. This scheme was approved by the Council’s Cabinet in June 2005. The scheme
allows someone to defer or put off a part of their payment for permanent residential
accommodation in exchange for granting the Council a legal charge (mortgage) on their main or
only residence.
The Council sets criteria for applications and entry to the Deferred Payments Scheme and has
discretion to refuse applications which do not meet the Scheme’s entry criteria. The Scheme is
suitable for individuals who are willing to pay the full assessed charge for their accommodation,
but cannot sell their property on admission to permanent residential accommodation or where
there are no alternative means of paying for accommodation. Payments for residential
accommodation will become payable to the Council when the Deferred Payment Agreement has
ended.
First Twelve Weeks’ Stay in a Care Home
2.
The capital value of a person’s main or only home, where he/she is the owner, is not taken into
account when assessing a person’s liability to pay for his/her residential accommodation for the
first twelve weeks of his/her residence at a residential home where the arrangements are made
by the Council under Part III of the National Assistance Act 1948. This is known as the 12 Week
Property Disregard Period. Where more than one property is owned, there is no entitlement to
a 12 week property disregard or a deferred payment on any properties that would not be the
service user’s own home, were the service user not in a residential home. Where the application
is successful, a Deferred Payment Agreement would commence after this initial 12 week period.
3.
Eligibility to Apply to Join the Deferred Payments Scheme
The Council has discretion whether or not to accept applications to join the Deferred Payments
Scheme. Service users must meet the following criteria in order to apply for to join the Deferred
Payments Scheme:

Service users must own or have a beneficial interest in a property. The principle of
beneficial interest establishes the financial value owing to each party if the property is
sold.

Service users must not have savings/investments above the capital limit set by the
Department of Health (£23,250 in 2012/13)

Service users are not able to sell their home immediately in order to pay their care home
fees

Service users are in the process of selling their home, but would not be able to pay the
full cost of their care until the sale has been completed

Service users and third parties (in the case of Third Party Top Up agreements) give
consent to a credit check being carried out to assess their creditworthiness.
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
4.
Service users and joint owners (in the case of jointly owned properties) give consent to a
valuation being carried out to assess the value of the property.
Assessment of Application
Applications to join the Deferred Payments Scheme will be assessed against the following
criteria:

The Council’s available resources for the Deferred Payments Scheme at the time of
application, based on the annual budget allocation for Deferred Payments.

The Council considers that there has been prior consideration to alternative options to
fund the applicant‘s care so that the Council’s limited resources are used effectively.
Alternative options include the following:
o A private arrangement to defer payments is made between the service user and
the care home
o A financial product is purchased to fund the care home fees (such as an
immediate needs annuity or equity release product)
o A loan is sought from family members pending the sale of the property
o Rental income from the property is used towards the care home fees
o The other alternative will be a short term funding please see paragraph twelve
Short- term assistance with the fees.

Higher priority will be given to someone with capacity to enter into the Deferred
Payment Agreement and who has no relatives/friends or representative who she/he
could authorise to assist in the sale of the property.

Lower priority will be given to applicants with relatives, solicitors or other representatives
who could undertake the practical steps to sell their property. This will ensure that the
Council’s limited resources are directed at those who are in need of the scheme as they
are unable to undertake the task of selling a property.

Applicants who own more than one property and have capacity to enter into an
agreement would not be eligible for under the Deferred Payments Scheme. They
should authorise someone to assist in the sale of property/properties to meet their care
needs.

The care home fees must be within the range within which the Council considers that the
applicant’s assessed social care needs can be met.

Should the service user elect to stay in a home with fees higher than those payable in an
alternative home that the Council considers meets the assessed needs of the applicant, a
third party will need to enter into an agreement with the care home to pay the difference
between the fees of the alternative home and the more expensive home for the duration
of the applicant’s stay in the preferred home. Payment must be made from the third
party’s own resources. This arrangement is known as a Third Party Top-up.

The Council must be satisfied that the applicant is able to pay the assessed contribution
for the chosen accommodation for the duration of his/her stay in the Home.

If the applicant has an outstanding mortgage on his/her property, a Deferred Payment will
only be considered if the applicant can continue to make these mortgage payments while
at the same time making their assessed contribution to care costs from their income.
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
In respect of leasehold property, the remaining lease should be more than 20 years or
the applicant can evidence that arrangements are in train to seek an extension to the
lease.

The equity in the individual’s property is sufficient to maintain them in their placement a
minimum of 1 year.
An offer of a Deferred Payment is at the discretion of the Council. It is under no obligation to
enter into a Deferred Payment with the applicant, but is required to provide a written response to
the applicant, detailing the reasons for declining it.
5.
Amount of Deferred Payment
A financial assessment will be carried out to determine the amount of the contribution towards
the cost of the care home fees that can be met from the service user’s income and capital,
excluding their main home. The deferred payment value is calculated by taking the difference
between:


6.
the amount a resident is assessed as being able to contribute from their income and
assets, including his/her former main or only home and
the amount he/she would be assessed as being able to contribute if his/her home were
not taken into account.
Deferred Payment Agreement
Where the applicant meets the criteria to join the Deferred Payments Scheme and where the
Council agrees to this, a Deferred Payment Agreement will be put in place. The Council can
enter into an agreement with residents, who are the owner/s of a property or their representative
who holds a Power of Attorney or a Deputy appointed by the Court of Protection, providing the
application conditions are fulfilled, as described in this policy.
The period during which the payment is deferred is called the Exempt Period.
When the deferred payment is in place, the Council maintains the contract with the care home
and pays, subject to the point below regarding income, the whole amount less any third party
contribution (known as a Third Party Top Up) and less the means tested contribution the service
user is required to make from their income. The collection of the fees that would otherwise be
chargeable to the applicant by reference to the value of their property is deferred under this
agreement. The service user still has to make interim payments towards the fees from his/her
income (including rent from the property) and any capital he/she holds other than his/her main
property in excess of the capital limits set by Central Government (£14,250 in 2012/13).
7.
Conditions of the Deferred Payment Arrangement
Where a request to join the Deferred Payment Scheme is agreed by the Council, the applicant
will be required to enter into a Deferred Payment Agreement when the 12 Week Property
Disregard Period ends.
Under the terms of this agreement, a legal charge will be placed on the applicant’s property to
secure the repayment due to the Council. The applicant and any joint owners must have
executed the Council’s form of charge on or before the end date of the 12 Week Property
Disregard Period. If there is already a charge on the property the consent of the mortgagee
must be obtained before the Council can agree to a Deferred Payment Agreement. The Council
cannot agree to a deferred payment in respect of a jointly owned property, unless all of the co4
owners give their permission to a charge being placed on the property. Where there is an
existing mortgage on the property, the Council should be satisfied that mortgage payments will
be made and that the debt to the Council can be paid upon the sale of the property.
In accordance with the 2001 Act and Regulations the amount of the total deferred payments
made by the Council will be repayable: 



on termination of the Deferred Payment Agreement by the applicant, on notice and
payment of the full outstanding amount;
on the sale of the property during the applicant’s lifetime;
within 56 days of the death of the applicant. For agreements under Section 22 of the
Health and Social Services and Social Security Adjudications Act, interest will be payable
from the day after the termination of the agreement.
upon the termination of the placement
Interest will be charged, as permitted under Section 55(6) of the Health and Social Care Act
2001, if payment is not made by the date it is due. The interest rate charged will be set annually
as part of the Council’s annual review of fees and charges and is 6.5% in 2012/13.
The Deferred Payment Agreement will be reviewed on an ongoing basis to ensure the terms
and conditions of the Agreement are continuing to be met. The applicant or their appointed
representative must inform the Council of any material changes in relation to the condition of
valuation of the property.
Credit Checks
Declarations will have been made on the completed financial assessment form and these will
apply as well as any credit checks to be made.
8.
Re-assessments following repayment to the Council
If a Deferred Payment Agreement is terminated or comes to an end because of the repayment
of all monies due, but the applicant remains in the care home, the Council shall carry out a reassessment of the service user’s social care needs.
9.

If, following the re-assessment, the applicant is assessed as having a need for care and
attention that he or she is able to meet for themselves, in terms of means and capacity,
or the existence of a lawfully authorised financial representative, then the Council shall
terminate the placement agreement with the care home. The service user will then be
fully responsible for making their own arrangements for residential care direct with the
care home or an alternative Home; or;

if the re-assessment results in the Council having a continuing responsibility for arranging
the applicant’s care and the needs can only be met at the current care home, the Council
shall extend the current placement agreement with the care home; or;

if the reassessment results in the Council having a continuing responsibility for arranging
the applicant’s care but his/her needs can be met at an alternative home at lower fees
the current placement agreement may be terminated and the applicant moved to the
alternative home.
Conditions in agreeing a deferred payment
Residents may request a Deferred Payment Arrangement either as a short term measure while
the sale of the property is being completed or exceptionally, as a longer term arrangement. In
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either case the Council can only agree to a Deferred Payment following a financial assessment
and receipt of the applicant’s completed Deferred Payment Application and payment of legal
fee. Legal fees for this scheme are set annually by the Council and are £450 in 2012/13
The Deferred Payment arrangement shall only take effect upon the applicant’s or duly
appointed representative signing the Deferred Payment Agreement. A certified copy of the
appointment of a Power of Attorney or order from the Court of Protection appointing a Deputy
will be accepted as evidence of authorisation to sign on behalf of the applicant.
Where the property is jointly owned, the co-owners as well as the applicant must execute the
Council’s form of charge.
In all cases the property must be maintained to a reasonable standard of repair and condition
and property insurance kept up to date.
10.
Property Valuation
The Council will arrange for a valuation of a property in any of the following circumstances:

when the service user submits an application to join the Deferred Payments Scheme

when the outstanding debt reaches £100,000 for someone who has a Deferred Payment
Agreement and, either annually thereafter, or at other intervals considered appropriate to
the individual’s circumstances

Where the property is jointly owned

When there is only a short period left on the lease of the property

When the property is located outside the Borough.
Under these circumstances a valuation will be arranged as soon as possible after an application
for a Deferred Payment Agreement has been submitted.
The Council will determine the most appropriate basis for valuation which may be a desktop
valuation using online property websites such as www.zoopla.co.uk, www.houseprices.co.uk or
www.hometrack.co.uk.
Where the Council deems it necessary to undertake a full valuation, this will be carried out by
the Council’s Property Services, an external valuer appointed by the Council or the Valuations
Office Agency (VOA). The VOA is an executive agency of HM Revenue and Customs (HMRC).
It is independent of Local Government and it specialises in providing valuations and property
advice required to support taxation, benefits and a range of statutory and non-statutory
valuation and surveying services to the Government and other public sector bodies.
11.
Refusal of Application
The Council can refuse a request for Deferred Payment. In such circumstances the decision
will be notified in writing to the applicant, giving reasons for this decision. Anyone who wishes to
appeal against this decision should submit a complaint to the Council under the Adults
Complaints Procedure.
Grounds for refusal of an application to join the Deferred Payments Scheme include, but are not
limited to the following:
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
The Council has insufficient resources to enter into the agreement based on its available
budget for Deferred Payments

The applicant does not meet the criteria to join the Deferred Payments Scheme as set
out in this policy

The application is not submitted within the first 6 weeks’ stay in the care home.

Credit checks undertaken on the applicant are unsatisfactory

Credit checks undertaken on a third party are unsatisfactory, in relation to a Third Party
Top Up

The applicant or joint owners have not agreed to accepting the conditions of the
Agreement.

The property valuation indicates that there is insufficient equity for the Council to enter
into a Deferred Payment Agreement

The Council’s request to place a legal charge on the property has been refused by the
Land Registry.

The applicant fails to provide the Council with all relevant information relating to his/her
finances and assets

The applicant does not pay the legal fees requested in relation to the Deferred Payment
Agreement.

The applicant is seeking to fraudulently obtain public money to fund their care.
12. Short- term assistance with the fees
If the Council is not able to agree the Deferred Payment, it may consider offering a time-limited,
short term loan to someone entering a residential or nursing care home where they should be
paying the full cost of their care, but are unable to do so because all their capital is tied up in
property.
This loan would be subject to the same terms and conditions as the Deferred Payment, but the
loan would only be agreed on a time limited basis. The initial agreement would be for up to six
months. The Council would place a legal charge on the service user’s main or only residence as
security for the loan, under Section 22 of the Health and Social Services and Social Security
Adjudications Act 1983.
This option is open to individuals who are assessed to pay the full cost of their accommodation,
but cannot sell their property on admission to permanent residential accommodation or where
there are no alternative means of paying for accommodation. Payments for residential
accommodation will become payable to the Council when the agreement with the Council has
ended.
Applicants with relatives, solicitors or other representatives who could undertake the practical
steps to sell their property may wish to apply to this scheme for a time-limited period where is it
is unlikely they will be able to complete the sale of their property within the 12 week property
disregard period.
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Applicants will need to authorise someone such as a solicitor or relative to assist in the sale of
property/properties and may apply to this scheme for a time-limited period if the property cannot
be sold within the 12 week property disregard period.
Where the Council does agree to assist with the fees on a short- term basis, an agreement will
be drawn up in the same way as for a Deferred Payment.
Where the applicant meets the criteria for this assistance, the funding arrangements are the
same as for a Deferred Payment.
Interest will be charged, as permitted under Section 22 of the Health and Social Services and
Social Security Adjudications Act 1983, if payment is not made by the date it is due.
If the payment is not made by the date it is due, the Council reserves the right to take
appropriate action and this may include the right of sale.
The Agreement will be reviewed on an ongoing basis to ensure the terms and conditions of the
Agreement are continuing to be met.
Funding will usually be agreed for an initial period of 6 months. It may be agreed to extend the
period of this agreement for up to 24 months, depending on the individual’s circumstances to
enable the sale/rental of the property.
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DEFERRED PAYMENTS SCHEME (LBRUT/DPS 1/1)
Please complete the form in black ink, using BLOCK CAPITALS throughout.
The notes referred to are given inside the back cover of this leaflet.
SECTION I: DETAILS OF PERSON APPLYING FOR THE DEFERRED PAYMENTS SCHEME
Mr/Mrs/Ms/other: …………………Surname: ……………………………………....
First names ……………………………………………………………………………
Date of birth ......./....../.......
Phone number where you can be contacted ……………………………………...
Mobile number ………………………………………………………………………..
Email address …………………………………………………………………………
SECTION 2: DETAILS OF REPRESENTATIVE OF PERSON APPLYING FOR THE
DEFERRED PAYMENTS SCHEME (IF RELEVANT) [please refer to note 1]
Mr/Mrs/Ms/other: …………………..Surname: ……………………………………
First names: …………………………………………………………………………..
Address: ……………………………………………………………………………….
...................................... Post code …………………………………………………
Telephone: ……………………………………………………………………………
Mobile number ………………………………………………………………………..
Email address …………………………………………………………………………
Relationship to person named in Section I (for example, son, daughter, solicitor):
……………………………………………………………………………………….....
Do you have legal authority to act on behalf of the person named in Section I?
[please see note I]
YES
NO
If YES, please tick the relevant box and submit copies of the relevant documents
Power of attorney
Enduring/ Lasting power of attorney
Receivership
Please tick which of the following you have authority to deal with
property
bank accounts
investments
savings
other (please state)
……………………………………………………………………………………….....
If NO, but you are in the process of applying for legal authority, please send copies of the
relevant papers, once you receive them to the Deferred Payment Officer, [please see note
I]
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SECTION 3: DETAILS OF YOUR RESIDENTIAL CARE
Name of care home: …………………………………………………………………
Address: ………………………………………………………………………………
…………………………………………………………………………………………..
…………………………………………………………………………………………..
…………………………………………………………… Post Code ………………
The date that you started living in the above care home on a permanent basis:
[Please see note 2]
………./………./……….
How were you placed in the Care Home?
Self / LBRuT / Other Council / Other (please circle) …………………………….
Did you apply for the twelve week property disregard?
[ please see note 3 ]
YES
NO
If YES, please give the dates of this disregard:
Start of disregard ……/…. /…… end of disregard ……/…. /……
What is the total weekly cost of your accommodation and care?
£……………… per week
If you are receiving nursing care, does this fee include the RNCC payment? (The RNCC is
paid by your primary care trust if you require certain nursing assistance at your care home)
YES
NO
Is a top-up being paid? [please see note 4]
YES
NO
If Yes, do you wish to include these payments in your deferred payments loan?
YES
NO
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SECTION 4 DETAILS OF PROPERTY OFFERED AS COLLATERAL
Address: ………………………………………………………………………………
………………………………………………………………………………………….
..................................................................... Post code ………………………….
Do you own the property specified above?
YES
NO
If YES, please tick the relevant box
I am the sole owner
I own it with other(s)
Please give details (for example jointly owned, tenancy in common) and give the name(s) on the
deeds, please continue on a separate sheet if required:
………………………………………………………………………………………………………………
PLEASE NOTE THAT LBRUT WILL NOT APPROVE A DEFERRED PAYMENT
APPLICATION UNLESS ALL JOINT OWNERS OF THE ABOVE PROPERTY PROVIDE
WRITTEN CONSENT OF THEIR ACCEPTANCE OF A LEGAL CHARGE BEING PLACED ON
THE PROPERTY WITH THIS FORM.
Where are the title deeds of the property held?
…………………………………………………………………………………………
What type of property is it? Please tick the relevant box
flat
bungalow
detached house
terraced house
other (please specify)
semi-detached house
…………………………………...
Does anyone reside in your home apart from you?
YES
NO
If YES, please provide details
Name
Age
Relationship to you
……………………………………………………………………………………….
……………………………………………………………………………………….
……………………………………………………………………………………….
When did you buy your home? [please see note 5 ] ………………………
Estimate of present value …………………….
Is your home mortgaged?
YES
NO
If YES, please provide the following details:
Name of mortgage lender: ………………………………………… Account no:
Date of mortgage agreement: …. /../…. Amount of outstanding mortgage: ………………..
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SECTION 5 DECLARATION







I wish to make an application under LBRUT’s Deferred Payment scheme.
I understand that acceptance of any application under this scheme is at discretion of
LBRUT and that the deferred payments will not take effect until a formal agreement is
entered into. The Council’s available resources for the Deferred Payments Scheme at the
time of application, based on the annual budget allocation for Deferred Payments.
I confirm that I own/ part-own (delete as appropriate) the property specified in Section 4.
I authorise LBRUT to check legal title to this property.
I agree to a legal charge being placed on the property specified in section 4. I agree to
pay the legal fee for this charge. I have enclosed written consent from all joint owners
accepting the legal charge being placed on the property.
I agree that I am responsible / …………………(Name of person signing in section 2 on
behalf of applicant / delete as appropriate) for payment of the applicant’s weekly
assessed contribution due from their income and capital assessed under the Charging for
Residential Accommodation Guidance (CRAG), The National Assistance Act 1948 & The
National Assistance (Assessment of Resources) Regulations 1992.
I confirm that I and all other persons who occupy or have a beneficial interest in the
property specified in section 4 have been made aware of this application, that they have
provided written consent to the legal charge on the property and they have been advised
to seek their own independent legal and financial advice before I enter into an agreement
under LBRUT’s Deferred Payment scheme.
I have /have not (please delete as appropriate) authorised a solicitor to act on my behalf:
Name of Solicitor: …………………………………………………………………………………….
Address ………………………………………………………………………………………………..




I confirm that information given on this form is true and accurate to the best of my
knowledge
I have read and understood and accept the terms and conditions of this application for a
Deferred Payment from LBRUT.
I understand that LBRUT will store the information provided on this form on paper and on
computer. I agree that when necessary this information may be shared with other
organisations that work with LBRUT. I understand that the information will be kept secure
and confidential and that I can request to see information held at any time in accordance
with the Data Protection Act 1998. (Further details are available at
www.richmond.gov.uk)
The offer to defer payments is at the discretion of LBRUT. If the application is declined,
LBRUT will write to you or your agent declared in section 2, in order to inform you of the
reason for its decision.
Signed ………………………………………………………………………………………………….
Name .…………………………………………………………………date …………………………
Signed on behalf of …………………………………………………………………………………...
Authority held ………………………………………………………………………………………….
If you are signing on behalf of the person applying to access the Deferred Payments
scheme in section 1, you must be the person named in Section 2 and have legal authority
to act on their behalf. A copy of this legal authority should be attached to this application
form.
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