Should you rent property under the Fair Deal/Nursing Home Support Scheme
In October 2022 the HSE changed the rules on the FD with regards to renting the applicant’s home.
Up to this point in time the HSE charged 80% of gross rental income as part of the income contribution to care. This left the applicant often in a loss situation as costs such as agents commission, service fees on apartments, repairs and renewals were all expected to be paid from the 20% of the rental income that the applicant was allowed to keep. In situations where the applicant’s qualified for a subsidy it was also reduced by the rental amount. As a consequence very few applicants under the Fair Deal rented their properties as financially it was not worth their while.
As part of the Government’s housing strategy the Housing Minister decided that by incentivising Nursing Home residents to rent out their homes it would help tackle the housing shortage and the % chargeable on rental income was reduced to 40% allowing the applicant to retain 60% of the income which should allow the Resident sufficient funds to pay any costs on the property and make a profit.
So should an applicant or their representatives rent out their home when they are in care. Well initially from a financial point of view it would appear to make sense in particular where a Nursing Home loan is required as it will reduce the amount of loan needed to fund the care and ultimately the amount that has to be repaid from the estate when the applicant passes.
However before one decides to rent the applicant’s home, you need to consider the following.
• What upgrades will the house require to ensure that it is compliant with the Rental Tenancies Board who regulate the rental sector. Often older persons homes require considerable investment to bring the houses up to the required rental standard. Do the applicant’s have that money available or do they need it to help fund the contribution to care and extra costs that the applicant’s incur when in care.
• Has the applicant capacity to sign a rental agreement or is their an Enduring Power of Attorney in place whereby the Attorney can sign an agreement.
• Tenants increased Notice period. Minimum notice periods were increased last May and are likely to be increased further as tenants rights remain a major focus point on the political agenda pursued by all parties. If Sinn Fein form any part of a future Government further longer notice periods will be implemented for sure. Currently Tenants in a house for 12 months are entitled to 6 months’ notice, and with eviction bans in place if they don’t leave you cannot evict them. While this is normally a serious situation for a landlord, for families of applicants in care this can put the estate of the applicant once they have passed in serious difficulty, as often or not the house needs to be sold to repay the Nursing Home loan which must be repaid within 12 months of the applicant passing. With the Revenue collecting the loan on behalf of the HSE, little or no mercy or leeway is given and punitive interest charges will be levied on the estate until the loan is repaid.
• For estates without Nursing Home loans the distribution of the estate will potentially be delayed as you will not be able to sell the home, normally the largest asset in a estate, until the tenants vacate.
• Given that the average Resident of a Nursing Home lives for 2.5 years is it worth the expense and risk of renting.
I personally do not believe so as it would appear the majority of residents and their families agree with me as the number of properties released to the rental market by residents in Nursing Homes has so far failed to meet Government expectations.
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