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Post No 71…What are the local authority 12-week property disregard and deferred payment schemes?

Posted on 12th May 2025 at 07:00
 
Introduction 
 
As with many elements of choosing a care home, the financial element is not only a concern for families but the information about how to do so is not always easy to find, particularly when a local authority needs to be involved. 
 
With many care home providers requesting evidence that folks can self-fund their placement for 2-3 years, many families are left worried about shorter term funding if they are relying on the proceeds of a property sale to fund the care placement. 
 
This post will be useful for those for have limited savings but have a property to sell to fund the care home placement. 
 
When is this an issue? 
 
For ‘asset rich’ people, funding a care home in the short term can be quite daunting and sometimes quite difficult. If you are in and around the £23,250 local authority threshold you would qualify for an assessment for funding but the question remains…who is going to pay the care fees whilst the house is being sold? 
 
In the current climate, houses are taking a fair time to sell and even if you do secure a buyer, you are potentially at the mercy of a chain of other people who need to sell their houses and this can take time to resolve. So, in these cases, how does the local authority support people? 
 
What financial support is available to me? 
 
Although different local authorities work slightly differently, many of them have what is known as a 12-week property disregard somewhere in their locker that can be used to help people who are at or below the £23k threshold in savings but have a property to sell. This is how Hampshire County Council describe the 12-week property disregard on their website: 
 
If you are a permanent resident in a care home, we will take your home into account. We will usually ignore its value for up to 12 weeks, starting from the date you first became a permanent resident. We call this the '12-week property disregard'. You will have to contribute towards your care costs during this period from income and other capital. 
 
So, this means that although you contribute your income (this is calculator via a financial assessment) the local authority will also contribute some funds during the first 12 weeks, which do not have to be repaid. There are a couple of snags however: 
 
• Depending on the chosen care home, the contribution of the persons income plus the local authority’s contribution may not total the full amount needed to pay the care home. In these cases, you can complete either a third-party top, or a first person top up (nb the first person top up means the person who is in the care home pays the difference, and I believe this is the only time this is allowed to happen. If you run out of funds completely, the top up must be paid by a third party) 
 
• In Hampshire the case load is so high that it is taking sometimes 6-9 months to process a 12-week property disregard application, which is not necessarily very helpful if care is needed urgently. 
 
The latter bullet point can easily become problematic for a care placement because the care home may not want to accept an ongoing debt whilst the local authority processes the application, and sometimes this can lead to admissions being declined because short term funding is not easily available. 
 
What happens after the 12-week property disregard? 
 
If the property has not sold within the 12 weeks, then the disregard effectively runs it course and the funding therefore stops, which again can cause issues for care homes. There is a second financial scheme that leads on from the 12-week property disregard called a deferred payment, which although is helpful, is a bit more serious because the deferred payment is a loan, from the local authority, to the person in care. 
 
The loan is secured by putting a charge against the property and therefore not all properties will qualify for the deferred payment, but even if you can qualify, keeping the loan amount as low as possible is advisable due to the interest repayment, currently 4.25% in Hampshire. 
 
To be fair to the local authority, a 4.25% loan is quite good and you can borrow more than you would be able to from say a personal loan from a bank, however there is an upper equity cap that cannot be exceeded. Again, when considering taking on a loan of this nature, it might be best to speak with the local authority or a SOLLA accredited financial advisor before committing to the loan. 
 
Is the deferred payment easy to set up? 
 
Unfortunately, like the 12-week property disregard, the deferred payment can take a long time to set up due to local authority back logs. It is often advised that you speak with the local authority as soon as possible if you plan to take on a deferred payment to save delaying the process. 
 
What I am seeing more of in recent times are debts running up against the residents account, not that the debt is accredited to the resident because the local authority has the debt, it can still make families feel uncomfortable knowing that a debt is building up, with many residents claiming to have never been in debt before, and given their generation, this is probably true. 
 
In cases of severe delay, the care home may serve the resident notice to protect themselves from a spiralling debt getting any higher. Although this is extreme, due to the ever-growing waiting list for local authority support, this is happening more often than it used to. 
 
What can I do to help the process? 
 
The best advise I can give is to stay in touch often with the care home to provide updates, and to work with the home to chase the local authority for a response on a regular basis. By doing this, the care provider at least knows all is being done to resolve the situation and stop the debt getting too large. If the debt is growing and the family are not being proactive, this could increase the risk of notice being served to financially protect the home against a very large debt. 
 
Conclusion 
 
Although the care providers will eventually get paid, it is important for families to manage any situation where they are applying for funding from the 12-week disregard and deferred payment schemes. Remember, it is always a good idea to seek financial support or advise from either the local authority or a private SOLLA accredited IFA, before making these big decisions. 
 
Remember also that this process can be rather arduous and may require a lot of chasing, but ultimately the effort can be worth it to secure the preferred care home placement. 
 
For referalls to a SOLLA accredited IFA in Southern Hampshire, known to The Care Whisperer, please click here 
 
Tagged as: Financing Care
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