Property & Home

National Seniors pitches ‘rightsizing’ plan to government

Apr 11, 2017

There are more calls for the government to create incentives for older Australians to downsize their homes.

As you would have read in recent weeks, barriers to retirees who want to downsize their homes are becoming a focus of the upcoming federal budget.

The Treasurer is reportedly considering a range of measures that could make it easier for you to downsize – and there has been no shortage of suggestions from seniors and housing groups.

From cutting stamp duty to changing the age pension assets test, there are a number of measures being proposed.

But there’s one proposal that is getting a fair bit of support.

National Seniors Australia has made a submission to the Federal Government, proposing a ‘Rightsizing Program’ to give older Australians more incentives to downsize.

Under the NSA’s Rightsizing Program, you would be able to have $250,000 from the sale of your home exempted from the age pension assets test.

That money would then need to be deposited into a secure savings account, which you could either invest in government bonds such as the Australian Government Future Fund or use for future health and aged care expenses.

“National Seniors believes that government must explore different ways to unlock the value of the family home, which allow seniors ongoing ownership and control of what is for many their primary asset,” their submission to the Federal Government reads.

“Older Australians are rightly uncomfortable with existing reverse mortgage products on offer so there is a need to explore alternative arrangements. A rightsizing program is just one example of the options available to government.”

The NSA believes a rightsizing scheme would enable older Australians to downsize to more appropriate housing; allow retirees to age-in-place; release funds tied up in bricks and mortar; stimulate the housing and renovation market; increase the supply of larger houses and provide a source of capital for economic development.

National Seniors Australia chief advocate Ian Henschke said the Rightsizing Program was formulated after a survey of more than 2000 retirees.

“We had some very interesting responses which showed a large number of older Australians are living in houses they consider to be too large,” he told Starts at 60.

“Almost a quarter of those people surveyed are living in houses they believe are too big and they would move if given the opportunity, but it’s better for most people to stay where they are – not because it’s the best option, but because there’s no incentive for them to downsize.”

Like many seniors groups, the NSA is pointing to two main disincentives preventing retirees from downsizing – stamp duty and the age pension assets test.

“If they move to a smaller place and have excess sale funds, those funds would be accessed as assets against their pension and in some cases they would lose their pension,” Mr Henschke said.

“Our proposed program would allow for up to $250,000 of excess funds to be quarantined from age pensions.”

While the NSA is suggesting the policy, the ball is in the Federal Government’s court as to whether they take notice.

Mr Henschke said it was a case of “we propose and the government disposes”.

“All I know is yesterday the Treasurer spoke about the housing affordability situation in Australia, so obviously it’s a high priority,” he said.

“If you had a couple of hundred thousand homes come onto the market as a result of the rightsizing policy, it would dampen the property boom, put more supply in the market and encourage more and better housing to the suit the needs of people.”

While the rightsizing program doesn’t focus on stamp duty, the NSA is also calling on the state governments to do something about that issue.

“We would be asking the state governments to do a similar thing to assist pensioners to rightsize by giving them assistance to sell without paying stamp duty on their properties,” Mr Henschke said.

“National Seniors are pleased to see a number of state governments looking at a reduction in stamp duty.

“We need less party politics and more common sense politics. If you’ve got someone living in a home that’s unsafe for them and costing them money but won’t move out because they could lose their pension, then just let them move and keep their pension.”