Written and reviewed by the Oath Healthcare care team · CQC-regulated provider · Last reviewed: 11 June 2026
“You’ll have to sell the house.” For most families, that sentence lands like a verdict. Mum needs residential care, the savings won’t stretch, and everyone assumes the family home goes on the market within the month. It usually doesn’t have to. A deferred payment agreement (DPA) is the scheme — written into the Care Act 2014 — that lets you pay for care from the value of the home without selling it during your lifetime.
This guide explains, in plain English, what a deferred payment agreement is, who qualifies, what it really costs, and the questions worth asking before you sign one.
As ever: this is general information, not financial advice. For your own situation, speak to a SOLLA-accredited later-life adviser or a solicitor.
Short on time? A deferred payment agreement means the council pays your care home fees and recovers the money later — usually when the house is sold or from your estate — secured by a legal charge on the property, with interest. Councils must offer one if you’re entering permanent residential care, your other savings are under £23,250, and your home is counted in the means test. It buys time and avoids a rushed sale, but interest compounds. And before signing anything: if care at home is still viable, the house never enters the means test at all — and NHS Continuing Healthcare can pay for everything regardless of assets.
What is a deferred payment agreement?
A deferred payment agreement is a formal arrangement with your local council, created by the Care Act 2014 and available from every English council since April 2015. The council pays your care home fees on your behalf. In return, it registers a legal charge against your home — like a mortgage lender would — and recovers what it has paid, plus interest and fees, when the property is eventually sold or within 90 days of your death.
In plain English: the council lends you your own care fees, secured on the house. The house stays yours. Nobody is forced to sell while you’re alive, and your family isn’t forced to find tens of thousands of pounds in a hurry.
Who qualifies for a deferred payment agreement?
Councils must offer you a DPA if all three of these apply:
- You’re entering (or already in) permanent residential or nursing home care following a care needs assessment.
- Your savings and assets other than your home are below £23,250 (the English upper capital limit in 2026).
- Your home is counted in the means test — meaning no spouse, partner or qualifying relative still lives in it.
Meet the criteria and it isn’t a favour — it’s an entitlement. Councils also have discretion to offer DPAs more widely, for example for some supported-living arrangements, so it’s always worth asking even if you don’t fit the list exactly.
One useful companion rule: when you first enter permanent residential care, the value of your home is ignored for the first 12 weeks (the “12-week property disregard”). That window is exactly when a DPA is usually arranged — the council helps with fees while the paperwork happens, so there’s no panic gap.
What does a deferred payment agreement cost?
A DPA is not free money. Three costs apply, and families should see all three in writing before signing:
| Cost | What it is | Typical scale |
|---|---|---|
| Interest | Charged on everything the council pays out, compounding | Capped nationally and reviewed every six months — recently in the region of 4–5% |
| Set-up fee | Legal charge registration, property valuation, admin | Usually a few hundred pounds; varies by council |
| The equity limit | You can’t defer the full house value — councils stop at roughly 90% of the property’s value, keeping a buffer | Sets how long the DPA can run before other plans are needed |
The compounding is the part to respect. At care fees of £1,300/week, a DPA defers roughly £67,000 a year — and the interest on the growing balance is added to the debt. Over four or five years that meaningfully reduces what’s left in the estate. Not a reason to refuse a DPA; a reason to plan with eyes open.
Your four real options — compared
| Option | House sold? | Main advantage | Main drawback |
|---|---|---|---|
| Deferred payment agreement | Not during your lifetime | No rushed sale; house may keep appreciating | Compounding interest + fees reduce the estate |
| Sell the home | Yes, upfront | Clean; no interest accruing | Irreversible; sale under time pressure; capital then means-tested |
| Rent the home out | No | Rental income offsets fees; can combine with a DPA | Landlord responsibilities; rent rarely covers full fees |
| Care at home instead | No — and the house is never means-tested | Stay in your own home; home fully disregarded in the financial assessment | Depends on needs being safely manageable at home |
The biggest insight in that table is the last row. The entire DPA question only arises because residential care puts the house into the means test. Care at home doesn’t — as we explained in our guide to the deprivation of assets rules, your home is fully disregarded while you receive care in it. Visiting care starts from £25/hour and live-in care from £1,100/week — often comparable to care home fees, with no legal charge on anything.
How to set up a deferred payment agreement: 6 steps
- Request a care needs assessment from the council’s adult social care team (if not already done at hospital discharge).
- Complete the financial assessment — this confirms the under-£23,250 test and that the home is counted.
- Ask explicitly for a deferred payment agreement. Councils must offer it when the criteria are met, but families who don’t ask can find it mentioned late, after sale plans have already been made.
- Get the terms in writing — interest rate, fees, the equity limit, and what happens when the limit approaches.
- Take advice before signing — a SOLLA adviser or solicitor can sanity-check it against alternatives like an immediate-needs annuity in an afternoon.
- Keep the paperwork together for the family. The DPA is settled from the estate within 90 days of death — executors need to know it exists.
Before you sign: two checks that can change everything
1. Could the NHS be paying instead?
If your relative’s needs are primarily health needs — complex conditions, nursing-level care, fast-deteriorating illness — NHS Continuing Healthcare can fund care in full, at home or in a nursing home, with no means test at all. No house in the calculation, no DPA needed. Two minutes on the free eligibility checker tells you whether it’s worth pursuing before any agreement is signed.
2. Is residential care actually the right setting?
A surprising number of DPA conversations happen for someone who could be safely cared for at home with the right support — particularly after a hospital stay, when decisions get made quickly. A free care assessment costs nothing and settles the question properly before a legal charge goes on the family home.
Frequently asked questions
Do all councils offer deferred payment agreements?
Yes. Every English council has been required to operate a deferred payment scheme since April 2015 under the Care Act 2014. If you meet the criteria, they must offer you one.
Does interest apply to a deferred payment agreement?
Yes. Councils can charge interest from day one, compounding, at a nationally capped rate reviewed every six months — recently around 4–5%. They can also charge reasonable set-up and admin fees, which can usually be added to the deferred amount.
When does a deferred payment agreement have to be repaid?
When the property is sold, or within 90 days of death, settled from the estate. You can also repay early at any time without penalty.
Can I rent out my home while I have a DPA?
Usually yes, and it’s often sensible — rental income reduces how fast the deferred debt grows. Tell the council first, as the agreement will set conditions about insurance and upkeep.
Is a deferred payment agreement the same as equity release?
No. Equity release is a commercial lifetime-mortgage product. A DPA is a statutory council scheme with a capped interest rate, designed solely to pay care fees. For care costs, the DPA is normally examined first.
Does a DPA apply if I get care in my own home?
Generally no — and you’re unlikely to need one. For care in your own home, the house is fully disregarded from the means test, so the pressure a DPA solves doesn’t arise in the first place.
Deciding how to pay for care? Talk it through first
The right order matters: check NHS funding, check whether care at home is viable, and only then decide how to fund residential care. Our care advisors have that conversation with families every day — free, honest, and with no obligation.
- 📞 Cambridge: 01223 755887
- 📞 Redbridge & East London: 020 3949 4333
- 📞 South Essex: 01268 206550
- 🌐 Or start with the free NHS Continuing Healthcare eligibility checker
We’re CQC Rated Good, family-run, and we publish our prices — visiting care from £25/hour, live-in care from £1,100/week. If a deferred payment agreement is genuinely your best route, we’ll say so. If care at home means you never need one, we’ll say that louder.