A change to Australia’s Age Pension system could free up almost 60,000 homes and help ease the national housing crisis.
Off the back of a recent report which found 85 percent of over-55s were living in homes with two or more spare bedrooms, the Retirement Living Council (RLC) has suggested reforms to allow older Australians to “right-size” without financial penalties.
RLC Executive Director Daniel Gannon said the Downsizing Australia Report showed the nation’s retirement system was stuck in the past.
“Right now, if an older homeowner sells the family home to move into a retirement village, they can be financially penalised,” Mr Gannon said.
“The rules are so outdated they block access to vital payments through the Age Pension and Commonwealth Rent Assistance (CRA), which then locks tens of thousands of older people in homes that aren’t suitable for ageing.”
He said “simple reforms” could save almost 100,000 retirees from being penalised and unlock almost 60,000 homes for younger buyers.
“You work your whole life, then get penalised for making a smart move that frees up homes for younger families? That’s punishing, painfully short-sighted, and profoundly self-defeating policy.”
Mr Gannon said the RLC suggested increasing the Age Pension assets test threshold to allow homeowners to “rightsize” comfortably before their pension income was impacted, as well as removing the incoming purchase price threshold for pensioners going into retirement villages to allow access to CRA payments, consistent with eligibility applicable to residents in other seniors’ communities, such as land lease and manufactured home estates.
He said these changes could lead to significant outcomes across the country, including:
- Releasing 59,576 homes back into the Australian housing market.
- Encouraging an additional 94,000 seniors to access retirement village housing options.
- Generating $2.95 billion in stamp duty revenue for state governments.
- Reducing costs and demand on public housing, hospital and aged care systems.
- Improving quality of life for older Australians who move into age-friendly retirement villages.
“The Commonwealth must fix the Age Pension assets test and bring CRA eligibility into the modern era, especially for retirement village residents. That one-two punch would give older Australians more housing choice and return tens of thousands of family homes to the market,” Mr Gannon said.
