Experts warn that renting out a home for nursing home residents living under the Fair Deal —- Nursing Home Support Scheme could be a pitfall, even with the prospective exemptions of rental income. But why? Get an insight into this blog and probable recommendations that might help you.
Darragh O’Brien, the Minister for Housing in Ireland, had earlier pointed out that the number of vacant properties belonging to nursing home residents is a waste of resources and opportunities. Some 8,000 homes were subjected to the concern. The Irish government has exerted every available resource to boost supply, whether it be through the purchase of new inventory or the repurposing of old stock.
Finally, from February 1, 2024, changes were made for nursing home residents to rent out their vacant principal residences and be allowed to keep 100% of their income, changing from 40%, which was 20% initially.
Fair Deal Opportunities to Obligations on Rental Income
As part of a planned reform of the scheme, nursing home residents under the Fair Deal Scheme are to pay a zero contribution towards the cost of care when they rent out their “principal home.” This will also unlock further housing availability for the rental market.
It does, however, mandate that you apply for principal private residence rental income and provide an approval letter from the Residential Tenancies Board for registration. You have to mention the rental agreement amount, listed with the most recent revenue notice of assessment.
As the tenancy contract has to be updated after the given period of 12 months or so, it can be a hassle for the resident to handle all this on their own. While the entire focus of Incentivising nursing home residents while renting or selling their homes, it also comes with obligations that might be rather stressful for a person living under care.
Not The Best Option for Residents with Lost Capacity
The Irish government is looking to introduce a new package of measures for the rental sector, and how Fair Deal users can gain from them. The rental income is a big part of that plan. Residents may use the money to fund further care needs.
It might work for elder people with lost capacity, due to illnesses like Dementia, where they cannot make any decisions on their own. Where only the homeowner can use the rental income, and only the homeowner has the right to sign the agreement, it puts them in a blind situation. First of all one needs to have an Endurance Power of Attorney in place, if they already have it, then it is probably not an option.
Secondly, even if one has the EPoA in place and has appointed someone, either their children or a solicitor to make the financial decisions on their behalf, it leads to risks of misuse of power.
Problems with Vacating the Property While Availing Nursing Home Loan
Even after the 3-year cap in place, where the residents don’t have to pay the 7.5% annual contribution against their principal residence, the Nursing Home Loan is still available and availed of by applicants.
It could be a false position if the homeowner dies within the 12-month tenure, Executors will have to wait for the period to complete, before they can replay the loan. If they deter the payment, it will incur punitive interest rates from Revenue.
Concerns of Misuse of Opportunities
Minister for Older Persons, Mary Butler has been overly vocal about her concerns about elderly abuse. She warns that there could be risks of older individuals being forced into nursing home care, with the sole intent of benefiting from the rental income.
Make A Conscious Decision When Opting for Rental Income Under the Fair Deal Scheme
For all these reasons, it takes careful consideration before choosing a route. The new changes are, of course, made to make things better for Fair Deal applicants, but there could be discrepancies that must not be neglected. It is highly recommended that you seek the guidance of a Fair Deal advisor or a solicitor to offer an unbiased opinion on the prospects and pitfalls.
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