Up to 25,000 family homes are locked out of the housing market due to an anomaly in the Fair Deal Nursing Home Scheme that charges an older person three separate times if they decide to rent it out, says Denis Naughten TD.
“Every year 4,500 people leave behind an empty home when they enter long-term nursing home care. Just 300 of these homes are rented out,” stated Denis Naughten.
“Unlike the social welfare means assessment where when a capital asset is rented out it is included in the calculation just once, under the Fair Deal Nursing Homes Support Scheme the same property is included three times in the means assessment.”
Denis Naughten added: “It also takes an average of six years for these homes to go through probate, to be sold and to be refurbished so this means that 25,000 homes, mainly family homes in established communities with broadband and close to schools, are being locked out of the housing system because we place a treble tax on an older person who rents out his or her home while in a nursing home.
“It makes no sense at the height of a housing crisis not to treat rental income in the same way across all Departments to ensure that it does not lock families out of accessible housing.
“The Department of Health fears that an older person may be forced into a nursing home if it introduces a system similar to that used daily by the Department of Social Welfare and this is despite the fact an older person must be deemed to require long term nursing home care by an independent medical assessment.
“In fact, it is likely that there are older people being exploited who should be in long term nursing home care but for the fact that rental property is being taxed on the treble.”
Denis Naughten pointed out that under a Social Welfare means test an asset’s market value or the net income generated from that asset – not both – is considered for the income calculation if a property is not occupied. However, under the Fair Deal nursing home scheme, 7.5% of the market value of the house is used but if that home is rented out when the older person goes into a nursing home then the gross income, exclusive of any costs such as maintenance or letting fees, is also included in the means calculation.
“Yet it gets worse because if that rent then goes through the older person’s bank account this is also considered as capital and is also included in the means assessment,” explained Denis Naughten.
“So, if a vacant property is leased out to a family that is looking for a roof over their heads, the older person in the nursing home is paying for this in their means assessment three times. In addition, such a means test can fail to consider the costs associated with the letting or maintenance of the property.
“Despite the fact that the Health Committee’s pre-legislative scrutiny of the plans for the Fair Deal Nursing Home Scheme recommended addressing the treble tax on rental properties 18 months ago, it seems that the Department of Health has refused to explore a mechanism which would allow some of these 25,000 vacant properties to be rented out while protecting older people.
“Nobody wants a system introduced that forces anyone into long term nursing home care, but we should not have a system either that penalises older people who want to see their home used to take a homeless family off our streets.
“All that is being looked for is a level playing field to ensure properties are treated in the same way for means assessment by two different Government Departments.
“Because of the current treble tax, at a time when we have a housing crisis, we are allowing bureaucracy to let up to 25,000 properties in good repair and in areas of high demand for rented homes, just rot away. Some of these properties even have 1,000mbps fibre broadband outside the door.
“As a result, these vacant properties become a liability for the older person, another worry for them, after they enter long term care.
“I’ve spoken with many family members of older people in nursing homes who would love to see these homes occupied rather than falling into disrepair and becoming unsightly, as well as denying young families a home.
“While I welcome the proposed reforms of the Fair Deal nursing home support scheme, which will protect family run businesses including farms, I believe these reforms must go further to release vacant homes across our cities, towns and rural areas which are falling into disrepair,” stated Denis Naughten.
“Currently just 300 homes a year out of a possible 4,500 Fair Deal vacant homes are rented out annually and usually by the time an older person’s estate is finalised, the property in question requires significant investment before it can become a home again.
“In light of the current housing shortage and the need to bring new families into communities where the taxpayer has already paid for infrastructure such as schools, roads, water etc I am urging cross party support for such a reform, as I already secured at the Health Committee. Surely, we can join the dots, help older people, give a home to young families, and stop properties becoming derelict? A win-win situation for everybody,” concluded Denis Naughten.
Wednesday, 5 May 2021
Denis Naughten (Roscommon-Galway, Independent)
Every year 4,500 people leave behind an empty home when they enter long-term nursing home care. Just 300 of these homes are rented out. Unlike the social welfare means assessment, where a capital asset when rented out is included in the calculation just once, under the fair deal nursing homes scheme, the same property is included three times in the means assessment. It takes an average of six years for these homes to go through probate, to be sold and to be refurbished. This means that 25,000 homes, mainly family homes in established communities with broadband and close to schools, are being locked out of the housing system because we place a treble tax on an older person who rents out his or her home. It makes no sense at the height of a housing crisis not to treat rental income in the same way across all Departments to ensure that it does not lock families out of accessible housing.
Micheál Martin (Taoiseach, Department of An Taoiseach; Cork South Central, Fianna Fail)
I thank the Deputy for his question. It is anticipated that a memo for Government will be brought to the Cabinet in the next week or two. It is a Government priority that this important legislation, which brings long-awaited rights and protections to farmers and small business owners, is brought forward and passed without delay. It was agreed that the Departments of Health and Housing, Local Government and Heritage would work together to bring forward a Committee Stage amendment on the treatment of the proceeds of the sale of a house while a resident is in long-term care. These Departments are working together on developing the policy on the treatment of rental income and have agreed a process which is currently in train to move this forward. The importance of addressing the programme for Government’s commitment aimed at bringing relevant vacant homes into use is a priority.
As the Deputy will be aware, the nursing home support scheme is a complex €1.4 billion scheme that affects the lives of more than 22,000 residents. It is, therefore, important to ensure that the cost-benefits and unintended consequences of any policy changes are fully understood before they are put in place. We will revert to the Deputy to report progress on this matter.