Summary: Mrs X complains the Council failed to deal properly with the charges for her mother’s care by failing to offer a deferred payment agreement and failing to take account of the costs arising from owning a flat before it was sold. The Council was at fault for failing to take account of the cost of owning the flat before it was sold. It needs to review the charges for the mother’s care, correct any errors and take action to ensure officers deal properly with this in the future.

The complaint

1. The complainant, whom I shall refer to as Mrs X, complains the Council failed to deal properly with the charges for her mother’s care by failing to offer a deferred payment agreement and failing to take account of the costs arising from owning a flat before it was sold.

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The Ombudsman’s role and powers

2. We investigate complaints about ‘maladministration’ and ‘service failure’. In this statement, I have used the word fault to refer to these. We must also consider whether any fault has had an adverse impact on the person making the complaint. I refer to this as ‘injustice’. If there has been fault which has caused an injustice, we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
3. If we are satisfied with a council’s actions or proposed actions, we can complete our investigation and issue a decision statement. (Local Government Act 1974, sections 30(1B) and 34H(i), as amended)

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How I considered this complaint

4. I have:
• considered the complaint and the documents provided by Mrs X;
• discussed the complaint with Mrs X;
• considered the comments and documents the Council has provided in response to my enquiries;
• considered the Ombudsman’s guidance on remedies; and
• invited comments on a draft of this statement from Mrs X and the Council, for me to consider before making my final decision.

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What I found

What happened

5. Mrs X’s mother, Mrs Y, started receiving care from the Council in 2015, when she lived in her own home. At the time she had the capacity to manage her own affairs. She signed her financial assessment which included this advice:
• “You must not transfer savings and investments, including property, for the purpose of reducing the charges you have to pay. If we find that you have done this, we will assess your charges as though you still had the savings and investments, and may take action to recover the charges that you should have paid.”
6. Mrs Y bought a flat in June 2016.
7. In November 2016 Mrs Y granted Mrs X power of attorney for her property and financial affairs.
8. In 2017 Mrs Y decided to give quarter shares of her flat to her three children, retaining a quarter for herself. She completed the process in January 2018.
9. Mrs Y went into hospital in August 2019. When she left hospital she stayed in residential respite care.
10. They put the flat up for sale in November 2019.
11. In January 2020 Mrs Y moved to another care home. The Council continued to charge her as a temporary resident.
12. In March 2020 it was agreed Mrs Y should remain permanently in residential care. The Council wrote to Mrs X on 12 March to let her know it would disregard the value of Mrs Y’s flat for the first 12 weeks of the permanent placement but, after that it would charge her the full cost of the placement (£775 a week). However, it said she would only have to pay £225.21 a week, with £549.79 accruing as a debt while she remained in residential care. It said it would want to place a charge on the property, to make sure the debt was repaid. It said it could do this if Mrs X entered into a deferred payment agreement with the Council on behalf of her mother. It advised her to get independent legal advice before entering into a deferred payment agreement. It said once the property was sold, Mrs Y would have to arrange a private placement with the care home, which would probably cost more than the Council was paying.
13. After speaking to Mrs X, the Council wrote to confirm that while the flat was on the market, it would continue to pay the shortfall. However, if there was no buyer after two to three months, it would ask her to sign a deferred payment agreement on behalf of her mother. As Mrs X had told the Council her mother only owed 25% of the flat, it pointed out what it had said in the financial assessment form Mrs Y signed in 2015 (see paragraph 5 above). It said it would treat Mrs Y as having a 100% share in the property and would expect her to receive all the proceeds from the sale, after disbursements.
14. The Council wrote again to Mrs X on 2 October. It told her the full cost of the placement was £817 a week from 4 May to 31 October. Mrs Y was paying £225.21 a week and the Council was paying £591.79. If there was no potential buyer within the next two to three months, it said it may ask her to sign a deferred payment agreement. It said administration fees and interest would then be backdated and added to the accruing debt.
15. On 21 October Mrs X asked the Council to reassess her mother’s fees. She said they were struggling to pay them because of the service charge and ground rent for the flat which remained unsold after a year. She provided documents which showed half-yearly ground rent of £221.47 was due in September and there were service charge arears of £1,049.57.
16. The Council next wrote to Mrs X in January 2021. It said it may ask her to sign a deferred payment agreement if there was no potential buyer by the end of January. It said Mrs Y’s accrued debt by the end of March would be £28,067.75.
17. When the Council wrote to Mrs X in April, it said Mrs Y would owe £33,345.36 by the end of March 2021. It said this would be payable when the flat was sold. It asked her to get in contact when a completion date had been agreed. At the end of April it told Mrs X her mother’s weekly charge would be £233.48 from 10 May.
18. When the Council wrote to Mrs X in October, it said Mrs Y owed £46,492.87. I reminded her what her mother had agreed in 2015 (see paragraph 5 above). It said, as she had transferred 25% shares of her flat to each of her children after being advised not to do this and after she started receiving support from the Council to meet her care needs, its position was unchanged and it would treat Mrs Y as if she still owned 100% of the flat.
19. On 17 January 2022 the Council sent Mrs X a direct payment agreement. It said she and anyone else named in the agreement would have to attend its office to sign it and provide proof of identify and other evidence.
20. The Council says it prefers to hold a face-to-face meeting to sign a deferred payment agreement, but could make other arrangements if this is not possible. It says Mrs X never expressed an interest in signing a deferred payment agreement.
21. On 9 February Mrs X told the Council they hoped to complete the sale of the flat in March. She said her mother would get 25% of the proceeds. The Council repeated its position that Mrs Y should get 100% of the proceeds.
22. On 24 February the Council wrote to confirm the accrued debt for Mrs Y’s care.
23. On 17 April the Council told Mrs X her mother had to pay £240.76 a week. This left her with £31.55 a week to cover her personal expenses (Personal Expenses Allowance of £25.65 plus a savings disregard of £5.90).
24. On 25 April the Council told Mrs X the accrued debt for Mrs Y’s care was £59,638.65 up to 27 March. It said Mrs Y was expected to reach her debt limit on 12 June 2022.
25. When the flat was finally sold at the end of April, Mrs Y and her three children received £16,473 each.
26. The Council wrote to Mrs X on 1 June. It said Mrs Y owed £44,793.38 up to 28 April 2022. This was based on the date when her capital would have fallen below £23,250 (the upper capital threshold for receiving financial support from a council), assuming she had received all the proceeds from the sale of the flat (£65,600).
27. When Mrs X wrote to the Council on 14 June, she said her mother decided to share ownership of the flat with her three children at a time when she had no intention of moving to a care home. She said officers had been aware of the change and never raised any concerns (until it was agreed Mrs Y would stay permanently in the care home). She said it was not within her control to ensure Mrs Y got 100% of the proceeds from the sale. She said Mr Y only had £16,400 to pay towards the outstanding charges.
28. On 4 October the Council told Mrs X its legal department had considered her comments about the claim that Mrs Y was entitled to receive 100% of the proceeds from the sale of the flat. It said as she had shared the property with her children after she started receiving support from the Council, it was satisfied she was entitled to receive 100% of the proceeds from its sale.
29. When the Council replied to Mrs X’s complaint in November, it:
• reconfirmed its position that Mrs Y had been entitled to receive 100% of the proceeds from the sale of the property;
• did not accept that payment of maintenance of the flat should be deducted from the charges, as it had said a deferred payment agreement should be considered if the flat did not sell within two to three months.

Legal and administrative background

30. The charging rules for residential care are set out in the Care and Support (Charging and Assessment of Resources) Regulations 2014 (the Regulations), and the Care and Support Statutory Guidance 2014 (the Guidance). When the Council arranges a care home placement, it has to follow these rules when undertaking a financial assessment to decide how much a person has to pay towards the cost of their residential care.
31. The rules state that people who have over the upper capital limit (£23,250) have to pay for the full cost of their residential care home fees. However, once their capital has reduced to less than the upper capital limit, they only have to pay an assessed contribution towards their fees.
32. The Guidance says.

“There may be many reasons for a person depriving themselves of an asset. A local authority should therefore consider the following before deciding whether deprivation for the purpose of avoiding care and support charges has occurred:”

1. “whether avoiding the care and support charge was a significant motivation in the timing of the disposal of the asset; at the point the capital was disposed of could the person have a reasonable expectation of the need for care and support?”
2. “did the person have a reasonable expectation of needing to contribute to the cost of their eligible care needs?” (Annex E, paragraph 11)
1. Deferred payment agreements are designed to prevent people from being forced to sell their home in their lifetime to meet the cost of their care. Local authorities must offer them to people who meet the criteria:
• someone assessed as needing permanent residential care;
• someone with less than £23,250 in assets, excluding the value of their home;
• someone who’s home is not disregarded in their financial assessment.
2. The Guidance says:
• “The local authority must leave the person with a minimum amount of income. This is known as the Personal Expenses Allowance (PEA) …. Anything above this may be taken into account in determining charges.”
• “There may be some circumstances where is would not be appropriate for the local authority to leave a person only with the personal expenses allowance after charges. For example:”
1. “Where a person’s property has been disregarded the local authority should consider whether the PEA is sufficient to enable the person to meet any resultant costs. For example, allowance should be made for fixed payments (like mortgages, rent and Council Tax, building insurance, utility costs (gas, electricity and water, including basic heating during winter) and reasonable property maintenance costs.”

Is there evidence of fault by the Council which caused injustice?

35. The Council was not at fault for saying Mrs Y had deliberately deprived herself of capital to avoid care costs when she split ownership of her flat with her children. It had warned her not to transfer property in 2015 and what the consequences would be if she did. Its decision was in line with the Guidance because Mrs Y:
• was already receiving care and support from the Council when she split ownership of the flat with her children; and
• knew about the charges for care, as she had been paying for it since 2015.

That she had not anticipated moving to a care home is not relevant under the Guidance.

36. The Council told Mrs X her mother should be eligible for a deferred payment agreement. There is no evidence she wanted to take up the offer. The Council repeatedly told her it expected her mother to receive all the proceeds from the sale of the flat. It would have been in its interests to get Mrs X to enter into a deferred payment agreement, as it would have ensured payment of the outstanding debt when the property was sold. It will be more difficult for the Council to recover the money now the proceeds have been split four ways. But that is a problem for the Council and not an injustice to Mrs X or her mother. The Council’s willingness to defer the payments without an informal agreement has been of benefit to Mrs Y, as it avoided the need to pay administration costs or to pay interest on the deferred payments.
37. When the Council assessed Mrs Y’s charges it did not take account of the costs associated with owning the flat before it was sold. Mrs X specifically pointed out some of these costs in October 2020 (service charge and ground rent), but the Council continued to ignore them. Having decided Mrs Y should receive 100% of the proceeds from the sale of the flat, it should have assumed she was responsible for 100% of the costs associated with owning the flat. The failure to do so was fault by the Council. Its claim that it did not need to take account of these costs because it had offered a deferred payment agreement was illogical.

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Agreed action

38. I recommended the Council:
• within six weeks review the charges for Mrs Y’s care, taking account of the costs associated with owning the flat, and to correct any errors; and
• within eight weeks, take action to ensure that officers take account of the costs associated with owning property when doing financial assessments.
39. The Council has agreed to do this. It should provide us with evidence it has complied with the above actions.

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Final decision

40. I have completed my investigation on the basis there has been fault by the Council causing injustice which requires a remedy.

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Investigator's decision on behalf of the Ombudsman