Guide · rules for England and Wales, checked 2 October 2026

Deferred payment agreements: paying for care without selling the house

A deferred payment agreement lets the council pay care home fees now and get the money back from the house later, usually after death. Nobody has to sell in a hurry. But it is a loan, with interest and fees, and it grows quickly. Here is how it works, with a worked example.

Run the free check for your house to see whether the home is likely to count, and what to sort out first.

What a deferred payment agreement is

It is a legal agreement between you and the council. The council pays some or all of the care home fees. In return it registers a legal charge on the home at the Land Registry. A legal charge works like a mortgage: the council gets paid back before anyone else when the house is sold.

The debt is repaid when the house is sold, or from the estate after death, whichever comes first. It is never written off. Family can also pay it off at any time from other money and keep the house.

Who the council must offer it to

In England the council must offer an agreement if all of these are true:

• the council agrees your needs should be met in a care home, as a permanent resident;
• you own, or part own, the home you lived in;
• your savings and other assets, not counting the home, are £23,250 or less;
• the home is not ignored in the means test (for example, no husband, wife, partner or relative aged 60 or over still lives there); and
• you agree to the terms, such as keeping the home insured and maintained.

This applies to people who pay their own fees too. The council can refuse if it cannot get a first charge on the property, for example because a lender already has one. It can also offer an agreement to people who do not meet every condition, if it chooses. If someone can no longer make decisions, an attorney under a lasting power of attorney for property and financial affairs, or a deputy appointed by the court, can sign for them.

The costs: interest and fees

The maximum rate is set by law. It is the gilt rate in the latest Office for Budget Responsibility forecast plus 0.15%, and it changes every six months, on 1 January and 1 July. It was 4.75% from January to June 2026. The rate from 1 January 2027 will follow the forecast published with the Budget on 28 October 2026. Fees and interest can be added to the debt, or you can ask to pay them as you go, which stops them compounding.

How much can be borrowed

The council can lend up to the equity limit: 90% of the home’s value, minus £14,250, minus any mortgage. On a £250,000 house that is £225,000 less £14,250, so £210,750. The 10% left over is a cushion for interest and for a fall in house prices. Once the limit is reached the council stops lending, though interest keeps running. When the debt reaches 70% of the value, the council should review the arrangement with you.

Paying part from income

The council can ask you to pay towards the fees from your income, such as pensions. You keep a disposable income allowance of up to £144 a week to cover things like home insurance, utility bills and upkeep. Paying in more than you have to means borrowing less.

A worked example

Illustrative only. Fees £1,300 a week; pensions of £300 a week; the owner keeps £144 and pays £156 towards the fees. The council defers the other £1,144 a week, which is £59,488 a year. Interest stays at 4.65% and is added daily. Set-up and yearly fees are left out.

Interest in year 2 is three times year 1, because it is charged on a bigger debt, including the year 1 interest. On a £250,000 house, if its value stayed the same, the £210,750 equity limit would be reached after about three years and three months. After that the council would normally pay its own rate for the home; one that charges more might need a top-up from family, or a move.

Letting the house

Some people let the home to cover part of the fees. The council should let you keep a share of the rent. Think about income tax on the rent, a letting agent’s fees, insurance, repairs and empty months. Ask the council about its own rules before you decide.

Joint owners

If the home is jointly owned, every owner must agree to the charge and sign. The other owners must also agree not to stand in the way of a sale to repay the debt. In the means test, a share of a jointly owned home is valued for what it would sell for on its own, which is often far less than half. If you are a joint owner and also the other owner’s attorney, the Land Registry may need a different person to sign for them. Take legal advice early.

Ending the agreement, and what happens after death

• You, or someone acting for you, can end it at any time by paying everything owed.
• It ends when the house is sold and the council is repaid.
• After death the debt falls due 90 days later, unless the council allows longer. Interest keeps running until it is paid. The council should wait at least two weeks before sending the executors the full figure.
• If nothing is being done to repay after 90 days, the council can go to court, and may then charge the higher court rate of interest.

Wales

Wales has its own deferred payment scheme under the Social Services and Well-being (Wales) Act 2014. The main difference is the savings limit: you can qualify with savings, not counting the home, of £50,000 or less. Interest is also based on the gilt rate plus 0.15%, reviewed in January and July, and the debt falls due 90 days after death. Ask your council for its current rate and fees.

Pros and cons

For the full picture of who pays for care, and when the home counts, read care fees: who pays, and when the house counts. To get the will and powers of attorney in order first, see the House Plan.

Common questions