[+] Why Canberra is Trying to Lure Out Empty Nesters

Community and industry groups have welcomed the Federal government’s support for pensioners to downsize, arguing that it suits Australia’s ageing population and will alleviate housing affordability and construction industry shortages. Minister for Social Services Amanda Rishworth introduced legislation last month to incentivise pensioners to sell their empty-nest homes and move to smaller ones, freeing up some of the 13 million empty bedrooms in the country. The proposed legislation extends the asset-test exemption for pensioners from 12 months to 24 months, providing more time for older Australians to buy a new home before the proceeds of the sale impact their pension payments. It will also lower the rate used to calculate pension payments, known as the deeming rate, from 2.25 per cent to 0.25 per cent on the proceeds from the sale of their home. “To have this come out within the first days of the Labor government speaks to their understanding,” Lifestyle Communities managing director James Kelly told The Urban Developer . “I think this is just the start. I think the reality is there’s lots of affordable housing in Australia, it’s just got the wrong people in it.” Community and industry groups agree that the provisions in the Social Services and Other Legislation Amendment (Incentivising Pensioners to Downsize) Bill 2022 will only have a moderate impact, albeit in the right direction. ▲ A render of the Lifestyle Woodlea clubhouse in Aintree, Victoria. Council on the Ageing chief executive Ian Yates told The Urban Developer that “I think it probably smooths the way for people who are thinking about rightsizing anyway”. “And it removes an impediment, some of the disincentives. So, I think it’s a sensible measure.” Impact unclear, but likely limited According to the government, there are about 445,000 pensioners whose rate of payment is affected by deeming. “More than 8000 pensioners and other people receiving income support sold their homes last year, and it is expected this number will increase if the changes are legislated,” a Department of Social Services spokesperson told The Urban Developer . But the potential impact of the new provision remains unknown. “Nobody knows how many downsizers there are, because there isn’t any data collection,” Yates says. “I think we’re working in the dark a bit.” Kelly agrees, saying that “it’s actually really hard to get the ABS to generate those numbers”. More reform needed Kelly argues that more legislative work in the area would yield greater results. ▲ The depth of the potential downsizer market in Australia remains an unknown. “We would love to see more action by the government. Federal governments traditionally have been very quick to give incentives to first-home buyers. We’d love to see them start to incentivise last-home buyers. “The recent Productivity Commission report showed that first-home buyer support just goes into builders’ pockets; it doesn’t make housing cheaper. “Most first-home buyers are priced out of buying new land and house packages. It’s just too expensive. And, in terms of life stage, the average block occupies 220 square metres. If you’re planning to have kids, that’s not ideal you want a backyard. “I would say 99.9 per cent of [Lifestyle customers] sell their homes to a first-time buyer before they downsize to a lifestyle community. That’s really opportune for government.” However, advocates say that the Bill will not be the vehicle for further reform. “That’s a whole new piece of thinking and legislation,” Kelly says. A DSS spokesperson told The Urban Developer that the Albanese government has further incentives for downsizing under way. ▲ A render of inside the clubhouse at Lifestyle Meridian, Clyde North, Victoria. “The government has made the commitment to allow people aged 55 or over to make a one-off downsizing contribution of up to $300,000 into superannuation when they sell their principal home and has frozen deeming rates for a period of two years,” the spokesperson says. Smooth passage expected for Bill The Bill seeks to extend a tax provision for pensioners who sell their house. A DSS spokesperson told The Urban Developer that “this legislation will help remove a potential barrier to pensioners downsizing their principal homes by reducing the impact it has on their social security payments.” The Incentivising Pensioners to Downsize Bill is before a parliamentary committee, who will consider its structure and implications before reporting with recommendations before October 20. The Urban Developer understands that the Bill will not meet serious opposition in the House of Representatives. However, it is not yet clear whether amendments to the Bill will be made on the committee’s recommendations or pushed by Liberal or Greens Senators. The changes in the Bill are due to take effect on the later of January 1, 2023, or a month after its passage. You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

[+] Why Canberra is Trying to Lure Out Empty Nesters

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[+] Why Canberra is Trying to Lure Out Empty Nesters

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