Paying for long-term care in England often requires individuals with assets to contribute significantly to their care home fees. In many cases, this means older people have had to sell their homes to fund residential care – a situation long deemed a social care “scandal”. To address this, the Care Act 2014 introduced Deferred Payment Agreements (DPAs) as a mechanism to ensure that no one is forced to sell their home during their lifetime to pay for care. A DPA is essentially a legal agreement whereby a local authority agrees to cover an individual’s care home costs upfront and recover the money later from the individual’s estate or upon the sale of their property. In effect, the person’s home is used as security for a loan from the council, allowing the delay of payment of care fees. This essay examines how DPAs work in law – focusing on the statutory framework in the Care Act 2014, the supporting regulations and guidance, and relevant case law – and discusses controversies surrounding DPAs, including issues of fairness, accessibility, and the impact on inheritance.
Legal Framework of Deferred Payment Agreements
Statutory Basis in the Care Act 2014
Deferred Payment Agreements became part of English law through sections 34–36 of the Care Act 2014, which established a universal deferred payment scheme from April 2015. Section 34 of the Act empowered the creation of regulations governing DPAs and loans for care costs, while section 35 expanded local authorities’ powers to offer DPAs in additional circumstances. The Care Act 2014 and its regulations make clear what a DPA entails: it is “an agreement under which a local authority agrees not to require” an adult to pay for their care and support services until a specified later time (typically until death or sale of the home). In practice, this means the council effectively lends the money for the care fees, secured by a legal charge against the person’s property.
The detailed rules for DPAs are set out in the Care and Support (Deferred Payment) Regulations 2014 (SI 2014/2671). These regulations, made under the Care Act, stipulate the conditions under which an individual is entitled to a DPA and how local authorities must operate the scheme. Crucially, local authorities must offer a deferred payment to any person who meets the eligibility criteria defined in the regulations. The scheme is therefore a legal entitlement for qualifying individuals, rather than a discretionary benefit, ensuring consistency across England.
Eligibility Criteria and Conditions
The eligibility criteria for entering a DPA are tightly defined in regulation 2 of the 2014 Regulations. In summary, a person is entitled to a DPA if they:
- Have eligible care needs that require care in a residential care home (as assessed by the local authority, or if self-funding, the authority agrees the needs would qualify and that a care home placement is appropriate).
- Are a permanent resident of a care home, or will be, with care arranged or approved by the local authority (this covers both local authority supported residents and self-funders who would otherwise qualify for support).
- Have capacity to enter into the agreement (or have a legally authorised representative, such as a Lasting Power of Attorney or court-appointed deputy, to act on their behalf if they lack capacity).
- Own a home (have a legal or beneficial interest in a property) which is their main or only home, and that property is not disregarded in the financial assessment. (In practice, this means no dependent or spouse is living in the home, since if a spouse or certain relatives occupy the home it is disregarded from the means test under separate rules.)
- Have limited other assets – specifically, total savings and investments (excluding the value of the home) at or below the upper capital limit (currently £23,250). This ensures DPAs target those who would otherwise be unable to pay their care fees without selling their property.
If all the above criteria are met and the person agrees to the terms, the council is obliged to enter into a Deferred Payment Agreement. In addition, the person (or their representative) must be able to provide adequate security for the deferred payments – in most cases this is achieved by the local authority securing a first legal charge on the individual’s property (similar to a mortgage). The regulations require the council to obtain this security (often by placing a charge at the Land Registry against the home) before deferring payments. Any existing encumbrances like mortgages are taken into account to ensure the council’s charge is sufficiently secure.
It should be noted that the value of the home and the need for security place a practical limit on how much can be deferred. Councils must set an “equity limit”, essentially a cap on the total amount deferred to avoid the deferred debt exceeding the value of the property. By law, the equity limit must leave a buffer of at least 10% of the property value plus £14,250 (the lower capital threshold) unutilised, and also account for any prior charges on the property. This helps cover accrued interest and guard against housing market fluctuations so that the council can recover the debt in full later. For example, on a home valued at £165,000, the maximum deferrable amount might be around £134,250, leaving a cushion of roughly 10% and the lower capital limit in equity remaining.
Mandatory and Discretionary DPAs
The DPA scheme under the Care Act is primarily a mandatory entitlement – local authorities must offer a DPA to any person who meets the criteria. Regulation 2(1) makes this clear by stating an authority “is required to enter into a deferred payment agreement” if the person meets the conditions and agrees to the terms. This universal duty, introduced in 2015, replaced the previous patchwork where some councils offered discretionary deferred payments and others did not. It was designed to end regional variations and guarantee everyone fair access to the option of deferring care fees.
However, the law also provides for limited discretion in two ways. First, under section 35 of the Act and regulation 3, councils may choose to offer a DPA even if not all the usual criteria are met, as long as they are satisfied there is adequate security. For instance, a local authority has discretion to extend a deferred payment to someone in supported living (rather than a care home) or to a person who narrowly misses an eligibility criterion (e.g. having slightly over £23,250 in savings), if doing so would help the person and the council is confident the debt can be repaid. This flexibility recognises that individual circumstances vary, and councils can prevent hardship by being pragmatic in borderline cases or for those in alternative care settings.
Second, the regulations enumerate circumstances in which even an eligible person can be refused a DPA. According to the Care and Support Statutory Guidance and regulation 11, a council may decline to enter an agreement despite eligibility if, for example: (a) it cannot secure a first charge on the property (perhaps due to title problems or an existing unreleased mortgage); (b) the person wants to defer an unsustainable “top-up” (i.e. additional optional care costs beyond the standard rate, which the council is not required to cover); or (c) the person does not agree to the core terms and responsibilities (such as insuring and maintaining the property). These refusal grounds serve as safeguards for local authorities against undue financial risk. For example, if someone insisted on deferring fees while letting their house fall into disrepair (thus jeopardising its value as security), or if they chose a very expensive care home requiring large top-up fees, the council is permitted to say no or to require conditions. In practice, outright refusals are expected to be rare; statutory guidance emphasises that authorities should seek to offer DPAs in all standard cases and use flexibility to adjust terms (such as limiting the deferred amount) rather than denying the agreement outright.
How Deferred Payment Agreements Work
In legal terms, a Deferred Payment Agreement is a contractual arrangement between the individual and the local authority, underpinned by the statute. The agreement essentially converts the person’s owed care charges into a debt owed to the council, which is secured by the charge on the person’s home. Key features of how DPAs operate include:
- Deferral of Charges: Once the DPA is in place, the local authority will defer (delay requiring payment of) the care home fees that the person would otherwise be paying. The council typically pays the care provider directly (or accrues the debt on its books) on the person’s behalf. The individual is not required to pay those deferred charges until the agreement ends. It is important to note that this is a deferral, not an exemption – the Care Act 2014 explicitly states the fees are only postponed, not forgiven. The person (or their estate) remains legally liable to repay the full deferred amount in the future.
- Contribution from Income: During the deferral period, the individual usually still contributes part of their income towards the care costs, while the remainder is deferred. Under the regulations, a person with a DPA must be allowed to retain a Disposable Income Allowance (DIA) of up to £144 per week out of their income. This allowance is to ensure they have funds to maintain and insure their property (which ultimately protects both the person’s asset and the council’s security) and to meet personal needs. Any income above this allowance (such as pension income minus the allowance) can be required as a contribution to ongoing care fees, reducing the amount that needs to be deferred. For example, if a person’s pension and other income leave them £200/week after personal expenses, the council might ask them to contribute £56 of that (everything above £144) towards the care home bill, thus slowing the growth of the deferred debt. Councils cannot compel contributions from any other assets or savings during the DPA beyond the normal means-testing rules (and they cannot force someone to sell other assets), but individuals are free to pay more on their own if they wish to keep the deferred debt smaller.
- Interest and Administrative Fees: A Deferred Payment Agreement is not an interest-free arrangement; the deferred debt will accrue interest over time, and councils can also charge an administrative fee for setting up and managing the agreement. The legal authority for this comes from the Care Act 2014 and regulations, which allow interest to be charged on the deferred amount to cover the council’s costs of lending the money. The idea is that the scheme should be cost-neutral to local authorities (who themselves might have to borrow funds or forgo investment income when fronting the care costs). The interest rate is capped by government – it is tied to the cost of government borrowing (indexed to the national gilt rates) and adjusts every six months. In practice, the rate has been a modest percentage (for example, around 2.65% in early years of the scheme), not exorbitant, but still an important factor as compounding interest can become significant over a long period. Administrative charges can include a one-time setup fee and possible annual or termination fees to cover legal and monitoring costs. All such charges and the interest rate must be clearly stated in the agreement upfront. For instance, a council might levy a £500 setup fee and small annual fees; these too are usually added to the deferred balance. The statutory guidance requires that the terms of the DPA (interest, fees, repayment process, etc.) be explained transparently so the individual (or their family) understands their obligations.
- Duration and Termination: A DPA typically lasts until the person dies, at which point it is expected that the deferred charges will be paid from their estate (usually by selling the house). It can also end if the person chooses to sell the property during their lifetime (and thus has liquid capital to pay off the debt), or if for some reason they decide to terminate the agreement and pay the accumulated charges by some other means. Under the regulations, if the property is sold or the person’s care needs change (for example, they leave the care home), the DPA will cease deferring new costs and settlement of the debt becomes due. In the event of the person’s death, the standard practice is that the debt should be paid within 90 days from the death. This 90-day period (mentioned in statutory guidance and many council policies) is intended to give the executor or family a reasonable window to arrange repayment, usually by selling the house if no other funds are available. If repayment is not made in a timely manner, the local authority can enforce the charge on the property – in essence, they have a legal right to recover the debt by forcing sale of the house if necessary, though in practice councils often work with families to avoid contentious enforcement. The DPA agreement usually requires any co-owners of the property to consent to the arrangement and the eventual sale or refinancing to repay the debt, so that all parties are aware of the outcome.
- Legal Nature and Consumer Protection: Legally, a deferred payment under the Care Act is a bespoke statutory arrangement rather than a conventional consumer credit loan. This has raised questions about whether DPAs fall under general financial regulations such as the Consumer Credit Act 1974. In practice, DPAs are exempt from FCA-regulated credit agreement requirements because they are a product of a public authority duty under statute, not a commercial loan – an important distinction that spares councils from needing consumer credit licenses. The Care Act 2014 and Regulations set out the rights and obligations, and any disputes would likely be addressed through public law (judicial review or ombudsman complaints) or contract law if it came to enforcement, rather than through consumer credit courts. As of the time of writing, there is little reported case law directly on DPAs, suggesting that significant legal challenges have been rare. One reason is that the framework is fairly clear and generous in giving people a right to defer; thus, contentious litigation (for example, someone suing for being denied a DPA) has been uncommon. In one Ombudsman case, however, a council was found at fault for not advising a family about the option of a DPA, resulting in unnecessary financial hardship – illustrating that while the courts haven’t been heavily involved, oversight bodies ensure councils follow the rules and inform the public. Generally, courts have upheld the principle that individuals can be required to use their assets (including home equity) to pay for care in the context of means-tested social care funding (see e.g. R v. Sefton MBC, ex p. Help the Aged [1997]—a pre-Care Act case confirming the legality of charging for care and taking property value into account). That principle underlies the DPA scheme as well: the scheme delays payment but ultimately the person’s assets are used to contribute to care costs, consistent with the means-testing rules.
In sum, the legal structure of DPAs under English law is a carefully balanced mechanism. It confers a right on individuals to defer payment of care fees to avoid fire-sales of their homes, while protecting local authorities through secured charges, interest provisions, and clear eligibility limits. The next part of this essay will examine how this framework has been received in practice and the debates regarding its fairness and effectiveness.
Controversies and Criticisms of DPAs
Fairness of the Scheme
The Deferred Payment Agreement scheme has prompted substantial debate about fairness in social care funding. On the one hand, DPAs are seen as an equitable reform: they prevent the immediate forced sale of one’s home – arguably a matter of dignity and peace of mind – and they introduce a form of universal access to a solution that was previously a postcode lottery. By 2015, the government explicitly stated that “no one will have to sell their home in their lifetime to pay for care” thanks to the new deferred payment scheme. In that sense, DPAs promote fairness by addressing a widely perceived injustice in the old system, where two people with similar needs could face very different outcomes depending on local council policies or personal finances.
However, critics argue that this fairness is somewhat illusory or incomplete. Deferred payment does not mean free payment. The individual still ultimately pays for their care, potentially losing a large portion of their estate. DPA or not, a homeowner with care needs will see the value of their house (their major asset) depleted to cover care costs – it’s only a question of timing. Some commentators point out that the promise that people “don’t have to sell their home” is narrowly true in life, but many will still have to sell it after death, or their heirs will, which for the family may feel little different in the end. As one pensioner’s family lamented, the scheme “is not available for homecare… It is only deferring the inevitable sale”, describing it as “very unfair” in that context. The sentiment that individuals are penalised for owning property persists: those who saved and bought homes end up using those assets for care, whereas those with no assets receive state support. This raises an ethical question: is it fair that prudent savers effectively fund their own care (and possibly subsidise others via interest), while others without assets rely entirely on public funding? Policymakers like former Care Minister Norman Lamb have defended the principle, arguing that homeowners with significant assets are “quite wealthy” and can afford to contribute, which is essential for a sustainable care systemlibdemvoice.org. But others, such as Lord Lipsey, have criticised the government for “welching on a universal deal”: he expected a scheme that benefited all homeowners, yet the actual policy bars people with more than £23,250 in savings (besides their home) from benefiting. In Lipsey’s view, imposing the upper asset limit cut the “balls” off the scheme’s promise of universality, because those who have substantial cash or liquid assets must use those first and cannot opt for a DPA until their other capital is spent down. The fairness debate here hinges on perspective: the government’s rationale was that if someone has, say, £100,000 in stocks, it is not unreasonable for them to use those funds for care before leaning on a DPA for their house – whereas Lipsey and others wanted everyone to have the choice to keep their house until death, even if they had other means to pay in the short term.
Another fairness concern is that DPAs only address residential care costs, not care provided at home. If an older person remains in their own home and receives care there, the value of the home is disregarded in charging (since they still occupy it), and thus they wouldn’t need a DPA. But if someone’s care needs force them into a care home, their home’s value comes into play and a DPA is needed to avoid sale. This can seem unfair: two individuals with identical homes and care needs might be treated differently based on the setting of care. The one in residential care must eventually use home equity for care; the one receiving care at home does not (though they might not get as intensive support). This discrepancy is an inherent issue in the social care means-test rules and not caused by DPAs per se, but DPAs shine a light on it. There is also the scenario of “catastrophic” care costs – some people face many years of high care fees (for example, those with dementia in a care home for a decade). Without an overall cap on liability, these individuals may still see almost all of their assets consumed, DPA or not. The Care Act 2014 originally planned a cap on care costs to limit the total each person pays in their lifetime (set to £72,000, later proposed as £86,000) in addition to DPAs. That cap has been repeatedly delayed (now slated for October 2025) and is not in force at the time of writing. In the absence of a cap, the fairness of DPAs is questioned – they delay the payment but do not protect people from potentially unlimited care bills that can **“wipe out everything that they worked and saved for”】. Some families feel that the State should bear more of the risk of these large costs, rather than effectively placing a lien on someone’s life savings.
From another angle, one might argue the DPA scheme is fair in a broader social sense: it strikes a compromise between individual and state responsibility. It lets people benefit from the full value of their home for their care (ensuring more choice and quality, potentially) while alive, and only calls upon that value once they no longer need the home. Taxpayers front the cost in the interim, but are reimbursed later. This arguably balances compassion (not forcing home sales in old age) with fiscal fairness (recouping funds so others can be helped). The interest charged is not profit-making but just covers costs, so the arrangement is fair to councils and other service users as well. In summary, whether DPAs are “fair” depends on whether one’s benchmark is protecting inheritances (which DPAs do only partially) or ensuring people use their own wealth before state support (which DPAs reinforce). The ongoing controversy reflects a lack of consensus in society about how the burden of long-term care should be shared between individuals and the public purse.
Access and Uptake Issues
When DPAs launched nationally in 2015, the government estimated a sizeable number of people would take them up. Impact assessments projected that around 25,000 care home residents per year would meet the criteria, of whom perhaps 40% (roughly 11,000) might utilise a DPA, on top of those already using the older schemes. In practice, uptake has been modest. In the first few years, the actual number of new DPAs each year was in the low thousands – suggesting many eligible people did not opt for the scheme. By one count, as of a few years into the scheme, only about 6,800 active DPAs existed across England (far below the eligible population). Several factors help explain this gap between eligibility and uptake, highlighting access issues and practical challenges:
- Lack of Awareness or Advice: Some families simply do not know the DPA option exists. The Care Act obliges local authorities to provide information and advice about paying for care, including DPAs, to anyone who may benefit. Despite this, not everyone gets the message at the right time. The process of moving an elderly relative into care is often distressing and fast-moving, and councils have been criticised on occasion for failing to inform people early enough that deferring payments was possible. The Local Government Ombudsman in 2020 reported cases where councils’ poor communication about DPAs led individuals to unnecessarily sell their homes or incur avoidable stress. To improve access, many councils now publish clear DPA policy documents and factsheets on their websites, and must offer independent financial advice referrals. But awareness among the public is still not universal.
- Reluctance to Take on Debt: Culturally, many older people in the UK are averse to the idea of borrowing against their home. A DPA is often described as “a loan from the council”longmores.law, which technically it is. Some people find this concept uncomfortable, preferring the certainty of selling the house and paying the fees, even if that means no inheritance. There can be a psychological hurdle: the home is often seen as a family legacy, and taking a DPA feels like “mortgaging” that legacy. For others, pride or mistrust of government schemes might deter them from signing a legal agreement with the council. This voluntary nature of DPAs (they must be actively requested and agreed) means that even among those eligible, not everyone will want one. It’s notable that DPAs are voluntary contracts, not automatic. A person can choose not to defer and instead pay from savings or sell property. Some families might even privately finance the care (e.g. children paying the fees to preserve the house), thus avoiding a DPA.
- Eligibility Exclusions: Certain homeowners in care might not qualify for a DPA, leaving them no choice but to sell or find other funding. For example, if a property is held in an unusual ownership structure (say a trust or complex joint tenancy) such that a council cannot secure a first charge, the council can refuse the DPA. Also, if the person’s other assets exceed £23,250, the council will delay offering a DPA until those assets are spent down. In practice, someone with substantial savings will be paying care fees out-of-pocket initially and might never need a DPA if they pass away or their savings last their lifetime. So the pool of DPA users is effectively those with high housing wealth but low liquid wealth – not everyone in a care home with a house falls into that category. Many middle-class homeowners do meet that profile (house-rich but cash-poor), yet the policy deliberately doesn’t cater to those who could pay by other means first.
- Administrative Hurdles: Setting up a Deferred Payment Agreement involves legal paperwork and procedural steps that can introduce delay or deter uptake if not handled smoothly. Councils typically require proof of ownership, property valuation, agreement on terms, and possibly consent from any co-owners. If the person lacks mental capacity and hasn’t appointed an attorney, a family member might need to apply to the Court of Protection to act on their behalf to sign the DPA – a process that can take time. The Care Act does anticipate this scenario (allowing a deputy or attorney to enter the agreement), but it adds complexity. The law does provide a 12-week property disregard from the start of permanent care (meaning for the first 12 weeks in a care home, the value of the home is ignored in charging). This gives a short window for families to organise a DPA. It is expected that the DPA should be in place by the end of that 12-week period. If court appointments or delays push beyond that, the person might accrue debts or the council might start charging against other assets in the interim. Thus, while the disregard is a helpful buffer, it requires prompt action to set up the DPA within roughly three months of admission to care.
- Variations in Local Practice: The DPA scheme is national, but some operational details can vary by council. For instance, councils have discretion in some cases to offer DPAs more widely than required (e.g. for care in supported living) or to accept other forms of security (such as a third-party guarantor or a different property). These practices aren’t uniform. Some councils may promote the scheme more actively than others. All must follow the same basic rules, but subtle differences (like how they handle top-up fees, how much equity buffer they insist on beyond the minimum 10%, or what fees they charge for setup) can affect how attractive or accessible a DPA appears to residents. If a council’s process is viewed as bureaucratic or the fees high, people might shy away. That said, most councils use standard agreements largely based on the Department of Health’s template, to comply with the statutory guidance that emphasizes consistency and transparency.
- Interactions with Other Funding: In a few situations, a person might not need a DPA because other funding sources cover the costs. For example, if someone is eligible for NHS Continuing Healthcare (where the NHS pays for all care costs due to medical needs), or if they are in aftercare under section 117 of the Mental Health Act (which is free), then no deferral is needed. These cases are relatively rare but worth noting: the DPA only applies to chargeable care costs. Similarly, if a person has an insurance policy or a dedicated care annuity that pays out for care fees, they might use that instead of deferring costs.
Overall, the uptake issue seems to be a mix of personal choice and practical barriers. Some empirical research by Age UK and others indicated that a fair number of people still resort to selling property to pay for care, either because they didn’t know about or want a DPA. The National Audit Office also cautioned in 2015 that councils had a challenging timeline to implement DPAs and needed to train staff and set up systems quickly. In the initial roll-out, there may have been inconsistencies in readiness. Today, with the scheme well established, the main access challenges are awareness and willingness. The government has periodically reminded councils of their duty to offer DPAs and updated the interest rates and guidance to keep the scheme viable. As more people enter care with even greater property wealth (due to rising house prices), DPAs could become more commonplace, but that will depend on whether families see it as a preferable option to immediate sale or commercial equity release products. Notably, a DPA from a council might offer a lower interest rate than a private equity release loan, and with the strong legal protections of the Care Act, it is arguably a consumer-friendly product – if consumers know and trust it. Bridging the information gap remains key to improving uptake and ensuring the policy achieves its aim.
Impact on Inheritance and Families
One of the most sensitive aspects of Deferred Payment Agreements is their effect on inheritance. For many people, a home is not just a financial asset but a family heirloom – often intended to be passed down to children or loved ones. Entering into a DPA means that a substantial claim will exist against that property by the time the person’s estate is settled. The local authority must be repaid the care fees it covered, plus interest, which can accumulate to tens of thousands of pounds over a few years. This directly reduces the value of the estate available to beneficiaries.
From the heirs’ perspective, the DPA can be a double-edged sword. It spares them the difficult decision of whether to sell mum or dad’s house while their parent is still alive (which can be emotionally fraught), but it also means that when the time comes, the debt might consume most of the property’s value. In practical terms, families often do end up having to sell the home after the older person’s death to pay off the council’s bill – even though the sale is happening later, it is still happening. The Alzheimer’s Society noted in 2015 that “after the person dies, any money still owed must be repaid within 90 days”, and acknowledged this time limit “may cause problems for people who then have to sell the property to pay off the loan”. This highlights a scenario: suppose the housing market is slow or the family hoped to keep the house, the DPA’s terms push strongly toward sale, and quickly. If the family has other resources (for example, savings or a mortgage they can take out themselves), they could choose to pay off the DPA to the council and retain the house. But not all will have that ability, especially since the sums can be large. It is not unheard of that by the end of an elderly person’s life, the deferred care fees plus interest can run into six figures. Unless the house is very valuable or there are other funds, the logical step is to sell it to clear the debt.
There is also an inheritance fairness issue: using up one’s estate to fund care might conflict with the person’s wishes to leave something for their children. Many feel a moral obligation to leave an inheritance. DPAs, by design, use the estate to fund care, reducing what’s left. Some critics argue this perpetuates a system where the cost of care falls heavily on individuals and their families, rather than being pooled across society. Others counter that inheritance is not an entitlement – the priority should be the person’s wellbeing and care, even if that consumes the assets. The Care Act tried to soften the blow by ensuring a small portion of equity (the 10% buffer and lower capital limit) is not touched, which in theory could leave at least something in the estate. In the earlier example of a £165,000 house, roughly £30,000 equity remained untouched by the DPA. That might be a modest inheritance (or could go toward final expenses). However, interest can continue to accrue on the deferred amount even in the period between death and repayment, which might nibble into that cushion if there are delays.
Another point of contention has been that interest and fees on DPAs are not capped by any overall limit. If and when the general cap on care costs comes into force, it’s been made clear that the cap (say £86,000) would apply only to the care costs themselves, not to interest or administrative charges incurred under a DPA. This means even with a cap, someone who used a DPA to reach the cap could still owe additional thousands in interest beyond the cap, which their estate must pay. So the heirs could still see a significant bill. From a legal standpoint, councils have the right to claim every penny of the deferred amount and associated charges from the estate, and this debt takes priority over the claims of those inheriting (since it’s secured on the property). It is essentially a first-call on the estate.
Families facing a DPA repayment may also worry about fire-sale situations: the 90-day guideline is tight. In some cases, councils can extend the repayment period by agreement, especially if there are complications in selling a property, but they are not obliged to indefinitely. The possibility of the council moving to enforce the charge (which could ultimately lead to a court order for sale) is a strong incentive for the estate to liquidate assets quickly. The press at times has presented this as councils “seizing homes” to pay for care, though in reality it’s the legal foreclosure on a debt rather than an arbitrary seizure. The optics, however, can be uncomfortable: an auction of a deceased person’s house to pay the council does not sit well with the public, hence councils try to avoid contentious enforcement if heirs are cooperative.
Despite these negatives, it should be said that for some families, a DPA can preserve more inheritance than an immediate sale might have. If the housing market is rising, delaying the sale could mean the property eventually sells for more, offsetting some interest costs. Also, if the person lives only a short time in care, they may end up deferring a smaller amount and the house is largely preserved. Renting out the property during the deferral is encouraged (the government allows it and the rental income can help cover ongoing interest or contribute to fees). If a family rents the house instead of selling, they keep the asset in the family while generating income to reduce the debt – potentially a win-win that leaves more equity for the estate than a premature sale would have (especially if the care period is not very long). The DPA provides the flexibility for such arrangements: the person (or family) could rent out the home and still defer the remaining costs, paying the council back once the person passes away, perhaps with rental proceeds or a later sale. The Alzheimer’s Society article noted that deferring could be advantageous if you’re able to rent out the property, but might be more expensive for some – underscoring that the financial outcome depends on individual circumstances like rental yield, length of deferral, interest rates, and housing price trends.
Lastly, it’s important to recognise the emotional impact on families. Knowing that the house is essentially “spoken for” by the council’s charge can be distressing, even if rationally the house was going to be used for care one way or another. Some heirs feel guilt or frustration – guilt if they are unable to keep the home in the family, frustration if the system leaves them with little from their parents’ estate. These emotions sometimes fuel the political debate, as stories emerge of people feeling they “worked hard all their life and ended up with nothing to pass on”. Legally, the DPA scheme does what it is intended to do, but it cannot fully reconcile the tension between using personal assets for care and the human desire to leave an inheritance. DPAs mitigate the timing of the sacrifice, not the fact of it.
In conclusion on this point, DPAs undoubtedly help elderly homeowners by preventing immediate loss of their home, giving them peace of mind and choice. Yet, they do so by shifting the financial burden to the estate, which means the impact is borne by the would-be inheritors. This trade-off is at the heart of controversies around DPAs. The law tries to be even-handed – protecting the elderly person’s right to not sell during their lifetime, while still recouping costs in fairness to public finances. Families must weigh the benefit of that deferment against the reduction in inheritance. Some will conclude it’s a necessary and acceptable trade, while others will view it as cold comfort since the end result (the home’s value paying for care) remains the same.
Conclusion
Deferred Payment Agreements under English law represent a carefully crafted legal solution to a long-standing social problem: how to fund long-term care without forcing older people to relinquish their homes at a vulnerable time. Legally, DPAs are grounded in the Care Act 2014 and detailed regulations which together create a clear framework of rights and obligations. They transform care fees into a secured debt, allowing individuals to delay payment until a later date – typically after they have passed away – with the local authority effectively acting as a lender of last resort. This framework has been lauded for its compassion and ingenuity, ensuring that those who meet the criteria must be given the option to defer their care costs. It reflects an important legal principle introduced by the Care Act: more consistent and person-centered care funding choices across England, replacing postcode variability with a national entitlement.
In operation, Deferred Payment Agreements have proven to be a viable mechanism, but not without shortcomings and debate. We have seen that while the law is robust – there is little ambiguity that councils must offer DPAs and how they should secure and administer them – the real-world outcomes are mixed. Controversies persist around who truly benefits. From a legal-analytical standpoint, DPAs tread a fine line between individual property rights and public interest. They allow an individual to retain ownership and control of their home during their lifetime, which is a significant legal right, while balancing the council’s interest by securing a charge to guarantee reimbursement. This balance has largely held up: there have been no major legal challenges overturning the scheme, indicating that it has been accepted as a proportionate means of achieving legitimate aims (supporting care funding while respecting homeowners). Even so, critics question whether the scheme’s limits – such as the exclusion of those with greater liquid assets, or the fact that it covers only care home settings – undermine its universality and fairness. The fairness debates often play out in the court of public opinion rather than courts of law, focusing on moral and political judgments about paying for care, rather than the legality of DPAs themselves (which is settled).
One must also acknowledge that DPAs are not a panacea for the social care funding crisis. They address one symptom (distress sales of homes) but not the root issue of high care costs. They still place the onus on individuals to ultimately pay for care if they have assets. As such, they have been described as a “bridge” to wider reform – originally meant to work in tandem with a cap on care costs that would prevent limitless liability. With broader funding reform delayed, DPAs operate in an environment where the fundamental tensions remain: personal assets versus social insurance. The controversies about inheritance and access highlight that DPAs, while beneficial in the narrow sense of timing, do not resolve the larger debate of how much the state versus the individual should pay for elder care. They could even be seen as entrenching the pay-your-own-way model, albeit in a more palatable form.
From a legal education perspective, DPAs under the Care Act 2014 are a fascinating example of law as a tool for social policy. They show how legislation can create a new financial instrument (a secured deferred loan) with built-in consumer protections and duties, effectively turning local authorities into lenders to achieve social aims. The scheme interacts with property law (through charges on land), contract law (the agreement terms), and public law (the statutory duties and guidance) – making it a rich topic for analysis. Thus far, the framework has functioned largely as intended, and any tweaks (for example, adjusting interest rates or clarifying discretionary elements) have been done via guidance or minor regulation updates rather than litigation or statutory overhaul.
In conclusion, Deferred Payment Agreements are a key legal mechanism in contemporary English adult social care, exemplifying a blend of compassion and pragmatism in the law. They legally enable people to keep their homes during their lifetime, which is an important policy achievement, while also safeguarding public funds by eventually recovering the costs. The criticisms – regarding fairness, uptake, and inheritance – do not so much suggest that the law is failing, but rather that it cannot, on its own, solve the deeper issues of social care funding. As we move forward, if the proposed cap on care costs and other reforms come into force, the role of DPAs may evolve (for instance, fewer people might need to defer once a cap limits their out-of-pocket spend). But until then, DPAs remain an essential legal option for thousands of families, navigating the difficult intersection of care, property, and finance. The success of the scheme will continue to be measured not just in legal terms of compliance, but in humane terms – by how well it eases the burden on elderly people and their families at a critical moment in their lives, without unduly burdening the public purse. In that respect, DPAs represent a significant, if imperfect, step towards a more equitable care system.
References (Harvard Style)
- Alzheimer’s Society (2015) Deferring payments may avoid having to sell a property immediately to pay for care. Dementia Together magazine, July 2015. alzheimers.org.uk
- Care Act 2014, c.23 (England and Wales).
- Care and Support (Deferred Payment) Regulations 2014, SI 2014/2671 (England). vlex.co.uk
- Department of Health & Social Care (2016) Care Act Factsheet 6: Reforming how people pay for their care and support. London: DHSC. gov.uk
- Department of Health & Social Care (2015) Local Authority Circular (DH)(2015)3: Deferred payment agreements – maximum chargeable interest rate. London: DHSC. gov.uk
- House of Commons Library (2024) Paying for adult social care in England. Briefing Paper Number SN01911. London: UK Parliament. researchbriefings.files.parliament.uk
- Legislation.gov.uk (2014) Care Act 2014 Explanatory Notes, Section 34: Deferred payment agreements and loans. London: HMSO.
- Lipsey, Lord (2013) HL Deb 15 October 2013, vol 748, col 603-605. “Government has ‘cut balls off’ elderly social care scheme” – comments during debate on Care Bill. theguardian.com
- Mulholland, H. and Ramesh, R. (2012) “Social care reform: elderly people to borrow cash for care”. The Guardian, 11 July 2012. theguardian.com
- Watt, N. (2013) “Government has ‘cut balls off’ elderly social care scheme”. The Guardian, 15 October 2013. theguardian.com
- Local Government & Social Care Ombudsman (2020) Complaint against XXX Council (ref no. 19 012 812) – Investigation into deferred payment agreement handling (report accessed via Age UK, 2020). lgo.org.uk
- Age UK (2017) Factsheet 38: Property and paying for residential care. London: Age UK. ageni.orgageni.org
- Norman Lamb (2014) Care Act Regulations Debate. HL Deb 9 Dec 2014, vol 757, col 1875-76 (Hansard).
