My mother-in-law is 95 years old, suffers with dementia and has been in a nursing home for 18 months. She has availed of the Fair Deal Scheme.
Her assets are her State pension and her home. My wife, her only child, has an enduring power of attorney.
The house cannot be rented under the scheme without adversely affecting her contributions to the nursing home care. We would like to sell the house and would like to know the implications and what steps we need to follow with the Nursing Home Support Scheme and Revenue.
Mr P McD, email
Fair Deal is, in general, a cracking good scheme and, while not perfect, an example of what we can sometimes get right in this State. While much certainly remains to be improved about eldercare in Ireland – not least properly structured and funded in-home care so that people can stay in familiar surroundings at less cost to the State and also the provision of sheltered housing – Fair Deal offers most older people and their families the peace of mind that, should they need nursing home care, it will be available to them regardless of their financial resources.
According to figures published by the Government last year, the State was paying a little more than €45,000 per person per year in financial support under Fair Deal.
But there have been a few issues that have proved contentious, mostly to do with property. These were addressed last year with the passing of the Nursing Home Support Scheme (Amendment) Act. The legislation had been working its way through the system for more than two years.
The primary focus was on what are called productive assets, ie family farms and businesses. Under Fair Deal, the nursing home resident is charged 80 per cent of their annual income and 7.5 per cent of the value of other assets and savings more than the amount of €36,000.
There was an exception for family homes where the 7.5 per cent annual charge was capped at three years. However, this cap did not, in most cases, apply to family businesses or to family farms and was understandably a bone of contention, with many business owners and farmers feeling the scheme actively discriminated against them.
New rules
The 2021 amendment Act extended that three-year cap to both family farms and businesses , where a family successor continues to operate the farm or business for at least six years.
But it was not the only purpose of the 2021 legislation, which came into force last October. Without the same fanfare, the Bill also extended the three-year cap to the sale or transfer of family homes of nursing home residents.
This addressed one of the other quirks of the Fair Deal regime. Until this point, if a home was sold while the owner was still availing of Fair Deal in the nursing home, the three-year cap was set aside and the proceeds of the house sale would be subject to the 7.5 per cent charge every year as long as the nursing home resident was alive.
That, understandably, meant hundreds of thousands of families simply left perfectly good properties idle. In Ireland, for most families, the family home is the largest part of a person’s estate – and therefor the biggest element within family inheritance. Both owners and their families were reluctant to create a situation where their entire estate/inheritance went to the State under Fair Deal over a number of years.
Of course, things are not always as they seem. The average term of residence for older or ill people under Fair Deal the last time I checked was about three years so, in practice, there would be very little difference between holding on to or selling the family home in most cases. But there are always exceptions and the whole concept sat uneasily with families.
Housing crisis
And in the midst of the most acute housing crisis in living memory, this was an anomaly that needed to be addressed.
As of last September, there were 22,108 long-term nursing home residents availing of Fair Deal. Now, some of these would not have been homeowners as they would have been renting. And others would have a spouse or partner still living in the property, so it was not vacant. I don’t have figures for either category but, clearly, well more than 10,000 homes were lying vacant across the State that could provide homes at a time of a historic squeeze on supply.
Announcing the new rules, the Government said the extension of the cap to the proceeds of a house sale was “consistent with the scheme’s core principle of fairness, by treating the home and its proceeds of sale in a similar way”.
“It is intended that this change will also remove any disincentive for people who want to sell a home left vacant after they enter residential care, an important consideration in the context of the current housing crisis,” they added.
The other advantages of selling the home are that you will no longer need to cover the financial cost of its retention – such as insurance, heating and energy bills, alarm monitoring etc. And then there are the inevitable maintenance and repair bills that seem to mount more rapidly in an empty property.
If your mother-in-law was paying these, it was coming out of the 20 per cent she had left of her pension or other income after the Fair Deal charge or was further dissipating her savings.
The good news is that your wife can sell her mother’s property without financial penalty. The charge against her home will still be limited to three years under Fair Deal. This applies equally to people applying for Fair Deal since the Act came into force last October 20th, or those who were already in nursing home care.
Process
The one condition is that the property cannot be sold before the owner has entered long-term residential nursing home care. If you sell the property before availing of Fair Deal and going into a nursing home, the proceeds will be treated as any other asset and will be subject to the 7.5 per cent charge as long as you are availing of Fair Deal.
But how do you go about it?
When your mother-in-law signed up to Fair Deal, she would have availed of a Nursing Home Loan to cover the amount charged against her home for the first three years of her stay. As part of that process, she consented to a "charging order" being registered against her home. As Revenue explains it, a charging order is like a mortgage charge against the property to protect the money the HSE is advancing to your mother-in-law to cover the 7.5 per cent charge against the home for the first three years or her nursing home stay.
When the loan is due to be repaid, the HSE tells Revenue, who collects the charge and notifies the HSE that the money has been collected. The HSE then releases the charge against the property.
The things that trigger repayment are: a) the death of your mother-in-law; and b) the sale or transfer of the property.
Your wife, who will be organising her mother's affairs through the enduring power of attorney, is supposed to notify the Nursing Home Support Office within 10 working days of the sale. This will generally have been the office through which Fair Deal was first signed up to. There is a list of offices around the State here.
She has six months to settle the bill before Revenue starts charging interest. It can be paid either online – through the Revenue MyAccount or ROS platform – or by bank draft made payable to the Collector General and sent, with your mother-in-law’s HSE client ID to: Collector-General’s Division, Sarsfield House, Francis Street, Limerick, V94 R972.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or by email to dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice
