Nursing-home residents in the Fair Deal scheme will 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.
Urrently people availing of the Fair Deal scheme can 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 Department of Health has confirmed the proposal, which was approved by Cabinet earlier this year, will be rolled out “imminently”.
A Department of Health report analyzed 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.
The HSE has been working on the operational aspects of the change before full implementation. A spokeswoman for the Department of Health said: “The rate of assessment for rental properties will be reduced from 80pc to 40pc for income from all principal residences.”
This will be reviewed after six months of operation, with the potential for a further amendment after that point.
This policy change addresses the commitments made under Housing For All Action 19.8.
“The change was made through committee-stage amendment to the Regulation of Providers of Building Works and Building Control (Amendment) Bill 2022. The Bill was approved by the Oireachtas on June 30 and signed into law by President (Michael D) Higgins in July .
“On 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 that will enable this measure to be rolled out imminently.”
The report looked at various options, including letting the resident hold on to all the income. But it said the measure decided on was a “balanced approach aimed at mitigating perverse incentives that would impact on the safeguarding and care of residents”.
It pointed out that the “generation of excessive additional income is considered to be a strong risk factor for poor outcomes for residents in terms of incentivising premature entry to care and exposing residents to safeguarding risks.”
The higher the uptake, the more revenue it would generate for the scheme while also generating more income for the resident, it said.
Only one property per person will benefit from the change – the property the resident lived in before entering the home.
The analysis suggests it may be a slow burner and may take two to three years for the full impacts to realised.
“It is expected that increasing returns will be seen over time as the measure embeds itself into the system and behavioral change takes hold.
“In addition, new entrants into the scheme may have more capacity and liquidity to take on a rental than longer-term residents.”
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.”
Age Action has stressed the need to ensure any safeguarding issues that might arise for residents from the changes are addressed. It also emphasized that the income be paid directly to the resident which would cover additional needs not met by Fair Deal.