Nursing-home residents in the Fair Deal scheme will from today be able to hold on to more of rental income raised from their family home, which could lead to around 1,200 extra houses on the market over time.

Up to now, people availing of the Fair Deal scheme could retain just 20pc of money generated by rent. The rest becomes part of their HSE income assessment, which decides how much they contribute to the cost of their care, with the State paying the remainder. The change means the amount which is part of their assessed income will fall from 80pc to 40pc.

The change was announced by the HSE today which said that the Nursing Homes Support Scheme also known as Fair Deal has been updated to change the rate at which the income from renting the principal private residence is assessed at. Under Fair Deal, nursing home fees can be paid out of the sale of a person’s home after they die, meaning they do not have to pay up front while they are alive. However, it is blamed for thousands of homes lying empty around the country because it is not worth while renting them out, while families are also reluctant to sell. The latest move is an attempt to encourage families to rent out the homes of loved ones who are currently in nursing homes by halving the amount of the rental income that is taxed.

“Anyone in nursing home care supported by the Fair Deal scheme may now have the rental income from their principal private residence assessed at 40pc rather than 80pc,” the HSE said.

A financial assessment sets out how much applicant will pay towards the cost of their nursing home care. The change in the assessment rate takes effect from today. A Department of Health report analysed different options to encourage more nursing-home residents to rent out their homes. It reveals there are currently more than 22,000 nursing-home residents in the Fair Deal scheme.

The report found the number of properties that might be available for rental by them is 3,115, which would represent a maximum of an additional 2,345 homes over and above those already rented out. However, it calculated that the numbers for rental 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. Its estimate of 1,200 properties coming up for rent would bring a net benefit to the Fair Deal scheme of €2.6m.

“This is not factoring in any financial or non-financial benefits to the State in terms of additional housing stock brought on to the market –such as reduction in demand for social housing,” the HSE said.

The HSE said that financial assessment sets out how much applicant will pay towards the cost of their nursing home care. An application form to avail of this is on or from the Nursing Home Support Scheme Offices. Applicants must submit, a Residential Tenancies Board registration approval letter; a rental agreement showing the rental amount; and latest notice of assessment from Revenue. In certain circumstances, if the home is not registered with the Residential Tenancies Board, it may still qualify for the reduced rate of 40pc on home rental income. Any rental income received from a property which is not a principal residence will continue to be treated as general income, however.

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