Residents of nursing homes under the Fair Deal program will be able to keep more of the rental income generated by their family home, which could lead to around 1,200 additional homes on the market over time.
Currently, people benefiting from the Fair Deal program can only keep 20% of the money generated from the rent.
The rest is part of their HSE revenue assessment, which decides their contribution to the cost of their care, with the state paying the rest.
The change means that the amount that forms part of their assessed income will drop from 80% to 40%.
The Department of Health has confirmed that the proposal, which was approved by Cabinet earlier this year, will be rolled out “immediately”.
A report by the Ministry of Health analyzed different options to encourage more nursing home residents to rent their homes.
It reveals that there are currently over 22,000 nursing home residents in the Fair Deal program.
The report revealed that the number of properties that could be available for rent through them is 3,115, which would represent a maximum of 2,345 additional homes on top of those already rented.
However, he calculated that the figures for letting would likely range from 427 to 1,973 properties – with “a central estimate of 1,200”. Factors such as the state of repair of the houses are unknown.
The HSE worked on the operational aspects of the change before it was fully implemented. A Department of Health spokeswoman said: ‘The rental property assessment rate will be reduced from 80% to 40% for income from all primary residences.’
This will be reviewed after six months of operation, with the possibility of further amendment after this point.
This policy change responds to the commitments made under action 19.8 housing for all.
“The change was made through a committee amendment to the Regulation of Contractors of Construction and Building Controls (Amendment) Bill 2022. The bill was approved by the Oireachtas on June 30 and signed into law by President (Michael D) Higgins in July. .
“At the foot of the legislation and in consultation with the department, the HSE is currently working to make the necessary administrative, technical and operational changes to the scheme which will allow the imminent deployment of this measure.
The report looked at various options, including letting the resident keep all income. But he said the measure decided upon was a “balanced approach aimed at mitigating perverse incentives that would impact the protection and care of residents”.
He pointed out that “the generation of excessive additional income is considered a significant risk factor for poor resident outcomes in terms of inducing premature entry into care and exposing residents to protective risks” .
The higher the adoption, the more revenue it would generate for the program while generating more revenue for the resident, he said.
Only one property per person will benefit from the change – the property the resident lived in before moving into the house.
The analysis suggests it may be a slow burner and it may take two to three years for the full impacts to materialize.
“It is expected that increasing returns will be seen over time as measurement becomes embedded in the system and behavior change takes hold.
“In addition, new entrants to the program may have more capacity and cash flow to take on a rental than longer-term residents.”
Its estimate of 1,200 properties for rent would bring a net benefit to the Fair Deal program of €2.6 million.
“This does not take into account any financial or non-financial benefit to the state in terms of additional housing stock being brought to market – such as reduced demand for social housing.”
Age Action highlighted the need to ensure that any backup issues that may arise for residents as a result of the changes are resolved. He also pointed out that the income would be paid directly to the resident, which would cover additional needs not met by Fair Deal.