The Fair Deal Scheme has changed – here’s what you need to know:
We regularly get asked to carry out property valuations for the Fair Deal Scheme.
Due to the housing crises, the Government have recently changed the rules to allow rental income from the family home to be retained in full by the owner. This change, it is hoped, will bring more currently vacant properties to the rental market.
How Fair Deal works
A (medical) needs-based assessment is followed by a financial assessment to determine how much an individual can afford to contribute from their own resources toward their care. This takes income and assets into account.
Income is charged at 80pc per annum, while assets carry a lien of 7.5pc per annum, with the family home charge capped after three years (max 22.5pc).
While the first €36,000 of assets is disregarded (€72,000 for a couple), everything else is fair game in Fair Deal.
There are separate derogations for family-run farms and businesses, so long as succession planning has been put in place.
Although the income-related bill is automatically deducted, families have an option to defer the asset-based contribution each year, as it is often based on illiquid property. Instead it is recouped after the individual has passed away.
This is a loan with interest based on the consumer price index (at present it is quite high, due to inflation).
The individual then chooses a nursing home, irrespective of fees – and the taxpayer picks up the bill’s balance.
Fair Deal is not allowed to charge the individual more than the cost of care, by law. At present, it cannot be used to provide care in the home.
Nursing homes are free to charge extra for entertainment, excursions and things like hairdressing. This is not recouped under Fair Deal.
If the spouse remains in the family home, than all contribution amounts are halved — that is, 40pc of income and 3.75pc of assets.
Changes to the rules
Since 2021, if the family home is sold while the owner is in nursing home care, then the amount realised can be ringfenced without a charge of 7.5pc applying after three years, as if it were still property rather than cash. This is thought to be freeing up some homes for resale.
Up to now, any and all income was charged at 80pc. While for most, their home was simply their pension, for others it became a working asset if it was rented out. So, most families simply left it vacant. Just 51 properties have been let out by owners in Fair Deal.
From February 1, rental income from the family home can be retained in full by the owner
It is estimated that anything between 4,000 and 7,000 homes are vacant.
In order to make an impact on housing crisis, the rules have been changed so that from February 1st 2024, rental income from the family home (only) can now be retained in full by the owner.
If you require a valuation for the Fair Deal Scheme please call us on 051-364052 and we will assist you.