Up to 50,000 homes locked up due to Fair Deal “treble tax” – Naughten

In Families, Infrastructure, News, Older People by Denis Naughten

 

 

Government rejects call to stop penalising property rental

 

Up to 50,000 family homes could be locked out of the housing market before Government brings forward amending legislation to address an anomaly in the Fair Deal Nursing Home Scheme, according to Denis Naughten.

Under the current scheme an older person is charged three separate times if they decide to rent it out their home after they enter a nursing home,  Denis Naughten TD told the Health Committee today (Wednesday) when considering the Nursing Home Support Scheme (amendment) Bill 2021.

“Every year up to 4,500 people leave behind an empty home when they enter long-term nursing home care. Just 400 of these homes are rented out,” stated Denis Naughten.

“Under the social welfare means assessment when a capital asset is rented out it is included in the calculation just once, however today the Government refused to amend the law where under the Fair Deal Nursing Homes Support Scheme the same property is included three times in the one means assessment.

“The Government is presently introducing reforms to the Fair Deal Nursing Homes Support Scheme but is refusing to change the law to address this anomaly and instead stating it will come back with further reforms for renting out these homes at some future date.”

Denis Naughten added: “At the moment it 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.

“And while Government has now accepted that this situation needs to be addressed, it is refusing to do so with the changes to the law currently before Dáil Éireann. This could see us having to wait another six years for changes in this area, leading to 50,000 homes being locked up in the interim.

“This approach makes absolutely no sense at the height of a housing crisis. We should treat rental income the same way across all Departments to ensure that it does not lock families out of accessible housing.”

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 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, today Minister Mary Butler, while admitting that the anomaly was being looked at, refused to put a mechanism in place which would allow some of these 50,000 potential vacant properties to be rented out.

“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 50,000 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’m disappointed that these reforms don’t go further by helping to release vacant homes across our cities, towns and rural areas which are now falling into disrepair,” stated Denis Naughten.

“Currently just 400 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 deeply disappointed that Government is ignoring its own commitment in the Programme for Government to address the issue of vacant homes. Surely, it makes sense to 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.

Watch the full discussion here: