Wednesday 21 August 2019

Home truths: It's time to make changes to Fair Deal scheme to free up properties

Question of care: An unintended consequence of Fair Deal is that thousands of houses are lying vacant rather than being sold or rented back into the property pool
Question of care: An unintended consequence of Fair Deal is that thousands of houses are lying vacant rather than being sold or rented back into the property pool
Sinead Ryan

Sinead Ryan

The unintended consequences of legislation are something every politician tries to avoid. Having to alter or, worse, row back on laws after they're badly made doesn't make good press.

When the Nursing Home Support Scheme (or 'Fair Deal' as it's commonly known) was introduced, it was considered by all to be a generally good idea. It still is. The notion that only wealthy people should be able to pick and choose where they spend their twilight years, while others must languish in a lesser environment or none at all, is inequitable.

The scheme has been something of a victim of its own success.

Around 22,500 people are long-term residents in nursing homes at any one time. Fifty per cent of these come from acute general hospitals; the remainder from their own home, and often after a slew of other care options have been exhausted.

However, at present, 23,338 are in the scheme, which is more than are budgeted for. It has led to claims of delays in processing applications, which inevitably adds to the so called 'bed-blocker' issue in hospitals.

While the State pays for the cost of care at a nursing home of choice (which is an eye-watering €50,000 per resident on average every year), it recoups this on a piecemeal basis.

First, from the drip-feed income (pension) of the person and later as a lien on their capital assets.

It is never enough, so the taxpayer funds the balance, some €1.29bn in 2017.

So far, so government.

The 'unintended consequence' is one of property, which wasn't a hot-button issue in 2009 when the scheme was introduced, but has become one since.

Around 14,000 nursing home occupants have their home included in the financial assessment - it means the State will collect a maximum of 22.5pc of its value towards the cost of care. Yet just 600 or so families avail of the opportunity to rent out the house while their loved one is resident in a nursing home. Fewer still sell it.

In some cases, of course, the spouse is still living in it; but there are thousands (an estimated 4,000 but nobody really knows) houses lying vacant, boarded up, or with a rent-free relative in situ rather than being sold or rented back into the property pool.

Why? Well, the legislation demands that 80pc of a person's total income is taken as a contribution towards care. Fine, if it's just the old age pension; not so fine if it's the entire rental income of their home - why bother to generate extra money only for the HSE to swipe it?

Sell and the 7.5pc per annum cap on asset contribution is removed, resulting in open season on the cash pile until Mammy or Daddy depart to their heavenly destination.

It wasn't supposed to be that way, but in a housing crisis things have a way of crystallising unintentionally.

A focus group (Lord save us) is looking at ways to change this. Ideas under consideration include capping the contribution from rent/cash generated, a tax break to make it more attractive to rent out vacant houses, and other similar measures.

Improving property supply aside, the government has a bigger problem. Life expectancy has risen a full eight years for women in the last four decades alone, and nearly 10 for men. By 2030 there will be 500,000 people over 65 (up 80pc from now), and a staggering one million by 2046.

Many of us will find ourselves, for some years at least, requiring residential care. I've never met one pensioner, ever, who would not be happier staying at home rather than in a home.

A solution that presents itself is astoundingly simple, yet it is inexplicable it has not been implemented.

Using Fair Deal to fund Home Care Packages (HCPs, woefully postcode and budget dependent) as well as nursing homes, thus delaying their necessity, is so obvious that every Minister for Older People or Social Protection has agreed with it, including current incumbent Jim Daly.

They really think it makes complete sense and yet, a decade later, cannot seem to do it. Nobody can explain why. It is truly mind-boggling.

HCPs are fitful in their availability, bureaucratic in nature and mostly inadequate. Because they are not means-tested (and why not?), it's an unseemly scramble to get enough 'hours' so that Mam or Dad can get washed and dressed in the morning or have someone pop in to help with medicines and make a cup of tea.

Create as many hours as people need, and you almost always delay their admittance to institutional care. Make them pay for it - we do everything else - and Fair Deal (capital recoup can be deferred until after death), is the obvious way to fund it.

It doesn't solve everything, obviously. Many people will still need nursing homes when home care becomes too onerous. Yet the government is more intent on funding inheritances than funding care.

It is obsessed with ensuring, at taxpayer expense, that houses are passed down to children.

Educated, affluent, out-the-door adults with homes of their own. Adding to their wealth pile is a bigger government priority than distributing a portion of it to fund the expensive care of an ageing population.

Why do we give enormously generous inheritance tax breaks from parents to adult children and then cap the very asset which is sitting there, to help fund the natural cycle in old age?

It's because we don't view 'the home' as an asset, but an emotional attachment.

But as the very elderly will tell you, sentimentalism doesn't pay the bills.

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