New deferred payment agreement (DPA) legislation FAQs, February 2018

Universal deferred payment agreements (DPAs) were introduced by the then Government in 2015 as part of its commitment to ensuring that “people should not be forced to sell their home in their lifetime to pay care home bills.” The current Government remains committed to this policy.

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What is this change all about?

Universal deferred payment agreements (DPAs) were introduced by the then Government in 2015 as part of its commitment to ensuring that “people should not be forced to sell their home in their lifetime to pay care home bills.” The current Government remains committed to this policy. Regulation 2(1) of the DPA Regulations sets out the circumstances under which local authorities must enter into a DPA with an individual (the criteria for a mandatory DPA). Under the original legislation, this included a requirement that local authorities were meeting or going to meet that individual’s needs or believed they would meet their needs if asked.

Because local authorities are not required to provide or arrange care home accommodation for persons with over £23,250 of assets (self-funders) under section 18 of the Care Act, this meant that local authorities generally only had to offer a DPA if they were meeting or going to meet such an adult’s needs under section 19 of the Care Act or considered they would do so if asked.

This was not the intended effect of the legislation and did not protect self-funders from having to sell their home in their life time to pay for their care.

The changes to the legislation we have made means that local authorities will have to enter into a DPA with a self-funder if the LA would be required to meet their needs but for the fact that they have assets over the upper capital limit and they meet the other criteria for a mandatory DPA. Local authorities will not, however, be required to meet the needs of a self-funder.

Do the new DPA regulations mean that local authorities have to enter into a DPA with an individual who has more than £23,250 in wealth other than their main or only home?

No, the mandatory DPA scheme still includes a requirement that an individual has £23,250 or less in assets other than their main or only home. In this regard the mandatory criteria for DPAs, as set out in Regulation 2(1) of the DPA regulations, remain unchanged.

Does this mean we have to offer individuals a ‘loan-type’ DPA if they want one?

A local authority cannot refuse a loan-type DPA to an individual who meets all the mandatory criteria for a DPA, as set out in Regulation 2(1) of the DPA Regulations, (including agreeing to the terms and conditions of the agreement). 

Why are you making these changes when the DPA scheme was working perfectly well before?

Whilst the DPA scheme was broadly working well in practice there was no legal requirement on local authorities to enter into a DPA unless they had chosen to meet a self-funder’s needs or believed they would choose to do so if asked. This meant that local authorities had a choice to exercise before a self-funder met this aspect of the criteria for a mandatory DPA (as set out in Regulation 2(1) of the DPA regulations) and hence became entitled to a DPA. That was never the intention of the original DPA legislation.  

Though we do not believe that this had a significant impact on the way the DPA scheme worked in practice, it is our understanding that in some areas it did mean that some individuals who were intended to qualify were being denied loan-type DPAs.

The amendments we are making will put the mandatory DPA scheme for self-funders on a stronger legal footing meaning that those who were originally intended to qualify for a mandatory DPA will do so. It also means that LAs cannot refuse loan-type DPAs where an individual who meets the criteria for a mandatory DPA (as set out in Regulation 2(1) of the DPA Regulations) requests one.

Will this increase the number of people who qualify for a mandatory DPA?

These changes will mean that all the individuals who were originally intended to qualify for a mandatory DPA under the legislation will now qualify for one in law. This is in line with the original policy intention.

Can local authorities charge different administration fees for loan-type DPAs than for ‘traditional’ DPAs?

The local authorities is permitted to charge for its costs of administration of a DPA. The costs are intended to include costs reasonably incurred by the local authority in agreeing, maintaining and ending a DPA. So, if the costs to the local authority are different for a loan-type DPA than for a “traditional” DPA the local authority may charge the respective adults different amounts but, subject to what is said about average costs below may not charge either adult more than the actual costs incurred in respect of their DPA.

Local authorities may charge the adult the average of the postage, printing and photocopying, time and overhead costs it incurs in relation to DPAs generally, and for this purpose may provide for different average costs for different situations.  However, all other administration costs (such as costs of registering the charge or discharging the security) must be the administration costs incurred by the local authority in respect of the actual agreement. All administration fees should be reasonable and (except where average costs are being used as mentioned above) must be no more than the costs incurred and LAs must make individuals aware of the administration fees that are likely to be charged before entering into the DPA.

Aren’t loan-type DPAs direct payments which local authorities have no powers to give in respect of care in care homes?

No. Loan-type deferred payments are not direct payments. A direct payment is a way by which a local authority can meet the care needs of local authority-supported care users – it is not a loan and does not have to be repaid, unlike a loan-type DPA. They are different schemes and different legislation applies to them.