UNIVERSAL DEFERRED PAYMENT SCHEME – Paying for residential Care by Hosking Financial Planning for WhereIsTheCare





What is it? 

It is a proposed scheme to allow people the choice to defer payments for long term care. An Impact Assessment by the department of health is assessing the impact of long term care funding.


What is the problem? 

Just speak to anyone who has, or has had a relative in need of residential care and you will hear about the problems they are facing.

Under the current system when someone is in need of care they will need to go through a financial assessment to access their ability to pay for their care.  Unfortunately under the current rules the person concerned may only have a property and very little else but still be deemed able to fund their own care.

These will be declared self-funders and they will need to find a way of releasing the capital locked within their homes to pay for the care.

This is a very daunting prospect for most people and will cause a great deal of distress. Having probably spent 25 years or more paying for their property they are reluctant to part with it.

In a lot of cases the burden passes to the family of having to explain to Mum or Dad why they are losing their homes.  Or as in my own case having to convince your father that the home will be great and trying to evade the subject when he keeps asking to go home.

Every year 35,000 people in the UK are at risk of losing their homes, and this number is likely to rise in the future.


Each year, approximately 55,000 people in England enter residential care as a self-funder. This means that they have more than £23,500 in assets and therefore, under the current charging rules for residential care, they are liable to pay for all of their residential care fees.

Since 2001, the Department has promoted a deferred payment scheme, in which local authorities have discretionary powers to defer self-funders’ care fees.  In other words, the authority pays the self-funder’s care fees, but, in exchange, it puts a charge on their property and recovers this charge once the property has been sold.

However, the current scheme is discretionary and there is wide variation in both the number of deferred payments offered in local authorities as well as in the eligibility conditions attached to local schemes.  Therefore, only about 4,000 people each year take up a deferred payment.


The Care Bill contains provisions for a universal deferred payment scheme.  All authorities will have a duty to offer deferred payments, with consistent rules for who is eligible, what fees they can defer and for how long.  The intention is to give people peace of mind, choice and control when they enter residential care and to ensure that no one has to sell their home in their lifetime to pay for care.  The impact assessment (IA) assesses the costs and benefits of the proposed scheme.  Where appropriate, the IA discusses the Department’s preferred specification of the scheme.


However, the details of the scheme is to be subject to further consultation.

The objective of the proposed universal deferred payment scheme is to ensure that no one has to sell their home within their lifetime to pay for care.

The current products available in the market such as Equity Release are not always suitable and it is hoped that in the future the industry may design better suited products, but for now the problem remains.

If there is other capital available besides the house, it is advisable to speak to an Adviser to see what other options are possible.


The Universal Deferred Payments Scheme bill goes into a lot more detail regarding the problems being faced, and whilst it is good news that at least the problems are being looked at, it does however still leave an awful lot of people facing the problem now.  Until the bill is accepted and written into law it seems that many people’s homes are still at risk.


Paul Hoskin


Maldon, Essex 01621 767200