Entitlements of Rental Income Under the Nursing Home Support Scheme

Nearly 12 years after introducing the Nursing Home Support Scheme (NHSS), or Fair Deal Scheme, in 2009, the Irish Government agreed to incentivise renting vacant principal private residences (PPR) for nursing home residents in 2021. Passed in the wake of the COVID-19 pandemic, the amendment comes under action 19.8 of the Nursing Home Support Scheme Act 2009, in pursuit of the Housing for All Strategy.

It changes the earlier rule of regarding 80% of the relevant “asset income” for renting a principal residence (or any assessable property) under the financial assessment. Now the principal residence is assessed at 40%, increasing the rental income disregard to 60%. Potentially it will be moved to 0% in the future. 

According to Fair Deal experts, however, the amendment is not as simple as it may seem and may rope in a lot of “false hopes.” Why so? This article explores the impacts of the 60% income disregard of rental income earned from a PPR and how the NHSS financial assessment works now.

How Rental Income Works Under the Fair Deal Scheme 

According to the recent reports by the Department of Health (Irish: An Roinn Sláinte), the Nursing Home Support Scheme grants 22,000+ nursing home residents under long-term care at the beginning of Q3 of 2024. The state allowance reportedly covers approximately 75% of the nursing home care costs for all these people. The allowance is worth over €1.12 billion. 

The Housing Minister’s approach to changing the disincentivising pattern of the scheme meets two concerns. 

• A reduced amount of rental income charges offers financial profit and greater stability for nursing home residents

• Release more vacant houses to address the current housing shortage in Ireland 

While the arrangement seems quite sensible and generally plausible for most nursing home residents, Fair Deal Scheme advisors and experts highlight certain letdowns that are commonly relatable. The most significant points at issue include preparing the house for renting and clashing the landlord’s best interests with the “tenancy rights.” 

Considerations for Renting a Property Under the Nursing Home Support Scheme

Even though the Nursing Home Support Scheme in Ireland is open to all, the pattern and design of the grant cater to a particular set of applicants. The rental income incentives, unfortunately, fail to live up to the practical needs of the greater number of residents or their families or meet the expectations of the government in establishing a plausible solution for all.

Compliance: When you are renting a house, it is important to register the property with the Residential Tenancies Board (RTB) and comply with the minimum property standards and fire safety regulations. 

Investment:  The compliance requirements entail certain home improvement costs. There are schemes and grant programs available for seniors and families; however, the majority of families don’t have the arrangements beforehand and are not ready for the out-of-pocket investment while meeting nursing home care costs excluded from the scheme. 

Capacity: The majority of Irish families seek the Fair Deal Scheme for loved ones who have dementia, Alzheimer's, or conditions that reduce their decision-making capacity. They don’t usually have a power of attorney in place. This makes it nearly impossible to rent the house because the nursing home resident cannot sign the rental agreement consciously.

Tenant’s Rights: The minimum entitlement for Irish tenants is 12 months, with 6 months' notice. The tenure is most likely to be extended in the future. There are eviction bans in place. Now, if the owner of the property—the nursing home resident—passes away before the tenure ends, the family has no choice but to wait for the period to end. 

Taxation: Taxation on the rent will be payable, although depending on the income, most of this should be offset by tax credits on the nursing home fees.

Nursing Home Loan:  If the resident in the nursing home passes their estate, they will have 12 months to repay their nursing home loan. If this timeline is shorter than the tenancy entitlement, it can create extreme complications in selling the property and arranging the amount for loan repayment. 

Importance of Consulting a Fair Deal Advisor Before Applying to the Fair Deal Scheme 

The biggest benefit of the Nursing Home Support Scheme—Fair Deal is directed towards older individuals above the age of 70. A principal residence, with a 3-year cap, a nursing home loan scheme, and now the rental income incentives can all conglomerate into a plausible solution making sense of a sound asset distribution and family inheritance. 

The most appreciated move is to plan ahead, have a power of attorney in place, and seek the guidance of a fair deal scheme expert before you apply for it. Filling the knowledge gap is crucial before you fill out the form. The experts can guide you on saving money, saving your property and making a conscious decision.