Participants in the Fair Deal Scheme should be obliged to rent out their houses

Brendan Burgess

Brendan Burgess

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The Fair Deal Scheme needs to be completely reviewed in the light of the shortage of housing.

In all of the cases I have come across the elderly person's home has been left empty as there is no incentive to rent it.

A case yesterday really brought it home to me. A woman with a family home in Dublin worth €700k which would easily command a rent of about €3,500 a month is lying idle.

She has an income of about €40,000 a year. So the state is paying about €40,000 a year, and will reclaim €21,000 a year from the eventual sale of the house. Her two sons will inherit the house - and as it happens neither need the money.

As far as I am concerned, she can easily afford to pay in full for her care. There is no reason at all why I should be paying for it through my taxes so that her two sons can inherit more.

If they rent the house, she would have a gross income of €80,000 a year.

This is enough to pay her nursing home fees in full.

She gets full tax relief on the €80,000 nursing home fees, so I am subsidising that anyway.

The two sons would still get the house free of CGT and free of CAT.

Of course, if the two sons and the mother want to leave the house empty, they are quite entitled to do that, but then they should pay the nursing home fees themselves.

Brendan
 
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While the sons argue that there is no incentive to rent out the house, I think that there is.

If she rents out the house, they would not be using up the 7.5% contribution from the value of the home.

Having said that, most people actually don't see it like this, and don't rent out the house.

So whether the incentive is there or not, it should be an absolute requirement- if they choose not to rent out the house, then they should not get any assistance towards nursing home fees.

Brendan
 
Hi Brendan.

Just one point on the above. Often enough the nursing home issue crystalizes when a son or daughter is told that their parent needs to move into such an environment. Cue search for place, visits, trying to cope with preparing mum or dad for the change etc. With all that goes on, trying to complete fair deal application etc the actual property can be a bit of a back burner issue. Surely the fair deal system needs to be streamlined in such a way that, in the above scenario, once the parent is settled in and the son or daughter can get a chance to sort practical issues that any rental income could be brought into the system as an update to the finances. Thus the person would have been looked after and their cost of care to the state would be reflective of the rental capacity of the property.
 
Hi Westgolf

Maybe then impute a rent of 10% of the value of the house. So that if they choose not to rent it or can't get around to it, they don't lose the Fair Deal Scheme, but they just get less.

It would be in their interest to get it rented as soon as possible.

And exclude any such Fair Deal tenancies from the RTB and other obligations.

Brendan
 
OK, so in many cases, there would be no incentive to rent

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So in case the borrower's income increases by €3k.

By making the fair deal scheme dependent on renting out the property, the cost to the taxpayer is less which means that more people could be helped and a lot of houses would be supplied again.

The current situation is as if we had shortages of food in Ireland and we were paying some farmers not to produce food.

Brendan
 
My mother in law's house lies empty. While her mental health deteoriates so did the house. Now she is in a nursing home, no one has power of attorney and nothing can be done without agreement between all the adult children. Once there is more than one adult child that becomes almost impossible. €10 k would probably get the house into OK condition to rent, but it won't happen, due to the lack of clarity of getting that back from the estate once the MIL dies.

To ensure homes can be rented then the ill parent needs to give power of attorney to some one while they can. Then some of her savings could be used to rent out the house, she would have an income and a family would have housing.
 
Brendan Burgess said:
The Fair Deal Scheme needs to be completely reviewed in the light of the shortage of housing.
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Why? The Fair Deal scheme is concerned with the provision of financial support for those with long term nursing home care needs. These needs have no correlation with the market for housing.

It's always reasonable to assess if the Fair Deal is being reasonably financed, but this does not appear to be a problem at present, as according to today's Indo, the government is to review the scheme to reduce the cost of nursing home care for farmers and small businesses.
http://www.independent.ie/business/farming/farmers-dont-want-special-treatment-from-fair-deal-36024806.html.

It would be most unreasonable if pensioners, i.e. those on fixed incomes, were forced to rent out their homes to make up any shortfall in Fair Deal funding if those in the farming and enterprise sectors get a special deal.
 
Hi PMU

Is there any reason at all for you to pay my father's nursing home care needs? I really don't see why, if he can pay for them himself.

Certainly the state should not set up a scheme which encourages good houses to be taken out of use.

Brendan
 
Brendan Burgess said:
Hi Westgolf

Maybe then impute a rent of 10% of the value of the house. So that if they choose not to rent it or can't get around to it, they don't lose the Fair Deal Scheme, but they just get less.

It would be in their interest to get it rented as soon as possible.

And exclude any such Fair Deal tenancies from the RTB and other obligations.

Brendan
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Good point but broaden it to allow for those properties in good rental areas which may bring in more than others.
Brendan Burgess said:
Hi PMU

Certainly the state should not set up a scheme which encourages good houses to be taken out of use.

Brendan
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Agreed, but a by product of the bureaucratic mess that is the fair deal scheme is the vacant properties arising because son or daughter is trying to finalize matters for parent and is so stressed and concerned that approval may be withdrawn.

Time for a complete modernization of the whole scheme.
 
I can see the sense of renting out the houses as outlined thus making a house available to someone who needs same. However these particular houses won't help those who are homeless unless the state once again decides they'll cover most of the cost. Also, this type of house at €3,500k per month is aimed at an elite part of society. Who says the houses that people own and are left idle will be suitable for those who are in need? Do we not already have many, many, houses left idle but people who need them say the accomodation isn't suitable for them because of a variety of reasons. If people who need housing and are almost permanently on the social keep refusing what they're offered, then there has to be consequences. Too much softness and too many goody goody organisations making this country a bit of a laugh for the working man and woman. Time for politicians to take tough stances on issues instead of trying to steal the limelight by saying they're going to hand out lucky bags to every Tom, Dick and Mary.
By the way Brendan, I agree totally with renting out those houses and also believe goverments/lawmakers need to bring in laws to make this happen.
 
Hi noproblem

It's not just people on social welfare. The lack of houses affects everyone.

If the supply of housing is increased, it will help people at all levels.

So if a house at €3,500 per month becomes available, the person taking that may be vacating a house at €2,000 a month and so on.

Brendan
 
Being a landlord is no bed of roses, as can be seen from many many threads in this forum. I am a landord myself. My siblings and I are also getting to grips with a parent requiring nursing home care, dealing with the solicitors re ward of court, and the infamous fair deal scheme. Our parent was seemingly fit and active, but had a sudden catastrophic stroke leaving them permanently incapacitated. Obliging us/one of us to become a landlord on top of everything else would be intolerable. The house would require a massive investment to bring it up to scratch for renting purposes; I suspect that this would be the case with a lot of properties owned by people in nursing homes. So, where would you draw the line?
 
Hi Andarma

Again, why should I pay for your parent's nursing home care? Or why should you pay for mine?

There should be an imputed rent. And if you don't collect it, then you pay for the nursing home yourselves.

In your particular case, it may make sense to sell the house.

Brendan
 
You have to remember that not everyone has a house that is worth a lot of money and is in a desirable renting location. In our case, the house is worth less than €50k and would be hard to rent out, particularly in its current condition. The payment for the nursing home wil be done in line with the Fair Deal method of calculation. All of our parent's savings may eventually be exhausted by the cost of the nursing home. What do you propose happens when all the savings run out and a house is also sold and those funds also run out, leaving just the pension, which will not cover the cost? This is a very real possibility for many people.
 
Andarma said:
All of our parent's savings may eventually be exhausted by the cost of the nursing home. What do you propose happens when all the savings run out and a house is also sold and those funds also run out, leaving just the pension, which will not cover the cost?
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Then the state will pay for it

But I should not be paying your their care so that they can leave their house and savings to their children.

Brendan
 
While the principle (a fairer contribution to costs) may be fair enough, I don't see this approach as practical - or particularly fair. Apart from issues of family crisis and/or conflict, and issues around the capacity of the person, as already mentioned, no one knows what the duration of the nursing home stay will be - a month, 6 months, 2 years ??? How to rent in these circumstances?

Furthermore, houses in some areas (and depending on condition), may be almost unrentable. The shortage of supply is not universal. Who decides on the imputed rental value and how, eg, is it when the person enters the nursing home for an indefinite stay or at the end? What would be the administration cost ? I am sure that there would be many other issues.

Would it not be simpler and fairer to reform the scheme and include a higher annual deduction for everyone, eg, 10% for up to 5 years (this figure is just from the top of the head). If some can, and want to, rent to help cover this, then fine. One way or the other, the contribution to the housing crisis would be relatively small.
 
Not in this situation and won't be as folks have passed on, whilst the debate is interesting I think the scheme is fair, it is hard enough to deal with all the issues that arise when a parent needs nursing home care, traumatic, frankly we have multiple other areas of waste in the system that need addressing before we get near the marginal state savings that just maybe obtained by the suggestion.

I think we have enough reluctant landlords in this country without looking for family members to step up, renovate to the standard required ( who pays ?) and list for rent, all a hassle that a designated family member will certainly not want in this busy world of ours.
 
The scheme as set up favours home owners.
Home owners contribute 7.5% of the house value for only 3 years.

Have recently been involved in organising the fair deal for a relative. She never bought a property but has amassed considerable savings. She has to contribute 7.5% of these each year until €36,000 remains.
 
Brendan Burgess said:
Hi noproblem

It's not just people on social welfare. The lack of houses affects everyone.

If the supply of housing is increased, it will help people at all levels.

So if a house at €3,500 per month becomes available, the person taking that may be vacating a house at €2,000 a month and so on.

Brendan
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I'm not disagreeing with you at all, but there's a huge number of unoccupied houses in the country with no nursing homes/fair deal involvement. An awful lot of people are turning up their noses at them. Why don't we sort that first before trying to sort another problem. Tough, tough, decisions are needed, those same tough decisions will need repeating with the fair deal properties also.
 
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