[7 September 2022]
The Property Council of Australia today welcomed the Australian Government’s commitment to reduce the adverse financial impact on pensioners looking to “right-size” as a “win-win” for older homeowners, governments and young families.
Executive Director of Retirement Living at the Property Council of Australia, Ben Myers, said incentivising older Australians to move into homes that require less maintenance and are designed to help people live independently for longer made sense.
Mr Myers said countless government reports and reviews over the last decade showed most older Australians’ wealth was locked up in the family home, so finding better ways to encourage them to unlock the equity in their home – and remove tax disincentives – was a good start in helping them help themselves.
“Incentivising older Australians to unlock their home equity and right-size into more suitable housing options, especially purpose-built age-friendly communities, is a wise move by government,” Mr Myers said. “Encouraging older Australians to right-size, not only contributes to healthier ageing, it’s also one of the smartest and fastest ways a government can boost much needed housing supply for families.”
The Government will today introduce the Social Services and Other Legislation Amendment (Incentivising Pensioners to Downsize) Bill 2022 which will give pensioners an additional 12-month asset test exemption on their home sale.
In 2015, the Productivity Commission ‘Housing Decisions for Older Australians’ report found the vast majority (ie, over 90 per cent) of Age Pension recipients that owned a house could leverage the equity in their home to achieve a “modest retirement standard” for the rest of their lives.
It found “a general lack of affordable downsizing options for older Australians, due in large part to the red tape and inconsistencies within state and territory land planning regimes”.
Mr Myers said then – as now – there was a need for broader action on housing supply, especially to encourage the supply of purpose-built age-friendly communities, to ensure Australians have affordable and accessible choices.
“State and local governments are making it very hard to finance and develop new retirement communities in suburbs and regions across Australia,” he said.
“Unless Australia is able to better provide the housing supply and choice that our ageing population needs, affordability and accessibility will be an increasingly dire social and economic issue.”
Mr Myers said industry research showed retirement village residents were not only happier, healthier and more actively engaged in their communities, but this also meant there were significant government savings because retirement living residents had fewer GP visits, significantly less hospital presentations and reduced length of stay (ie, reduced falls / depression) and delayed entry into residential aged care.
This is consistent with the Australian Government Advisory Panel on the Economic Potential of Senior Australians (2011) which found appropriate housing underpins the wellbeing of older Australians and reduces health and pension costs by: facilitating social participation; reducing demand on health services including mental health services; enabling effective delivery of community aged care; and using housing equity to supplement retirement incomes and help pay for services.
