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‘Outdated rules’: Calls grow to help seniors downsize and free the market
Growing calls from key property industry bodies have been pushing for reforms to support downsizing, making it easier for older Australians to sell their homes and free up the market.
The Retirement Living Council (RLC) has been urging for reforms to prevent seniors from being penalised for “rightsizing” into retirement villages, freeing up housing for thousands of potential buyers.
The RLC’s call comes after a new report revealed that the vast majority of older Australians have more spare bedrooms than younger generations.
According to the realestate.com.au and GemLife Downsizing Australia Report, 85 per cent of Australians aged 55 and older live in homes with two or more spare bedrooms.
By comparison, a quarter of Australians 25–54 have no spare rooms, and 5 per cent have fewer rooms than their family size requires.
RLC executive director, Daniel Gannon, argued that current policies have been penalising older generations for selling their family home to move into a retirement village.
“The rules are so outdated they block access to vital payments through the Age Pension and Commonwealth Rent Assistance (CRA), which then locks tens of thousands of older people in homes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.
According to Gannon, two “simple” reforms to the Age Pension assets test and CRA eligibility would make it easier for older Australians to move into retirement villages.
The reforms include changes to the Age Pension assets test, enabling single home owners who “rightsize” to own assets of up to $550,000 before their pension income is impacted.
The current threshold for single home owners regarding the Age Pension test is $314,000.
The proposed change would also include an equivalent increase to the threshold for couples.
The second reform is the removal of the incoming purchase price threshold for Age Pensioners who “rightsize” into retirement villages, allowing access to CRA payments.
The change would be consistent with eligibility applicable to residents in other seniors’ communities (land lease and manufactured home estates).
The current threshold is $252,000.
The RLC said the policy changes would enable thousands of houses to be freed up and improve the quality of life for older Australians.
According to the group, the changes could release 59,576 homes back into the housing market, and allow an extra 94,000 seniors to access retirement village housing options.
The reforms would also generate $2.95 billion in stamp duty revenue for state governments, and reduce costs and demand on public housing, hospital and aged care systems.
Gannon said it is pivotal for the federal government to amend the Age Pension assets test and modernise CRA eligibility, 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,” he said.
“These changes aren’t just about fairness – they would free up tens of thousands of family homes into the wider housing market, while also looking after retirees.”
He said that the latest report indicated that when populations change, policy frameworks must also adapt accordingly.
“Older Australians aren’t asking for handouts – they’re demanding modern policy settings that don’t work against them. This latest report is a huge wake-up call,” Gannon concluded.
According to the Downsizing Australia Report, smaller homes are ideal for downsizers, yet one to three-bedroom houses and units made up less than half of all homes built between the 2016 and 2021 censuses.
Earlier this year, Raine & Horne called for a CGT holiday and stamp duty relief to encourage older Australians to sell, following data that showed owners are reluctant to put their houses on the market.
As one-third of the population is expected to be aged 55 or older by 2050, older Australians are encouraged to downsize, allowing their housing stock to be used more efficiently.
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