The Retirement Living Council (RLC) is calling on major political parties to address Australia’s housing crisis by implementing two crucial reforms that could free up more than 59,000 homes.

The RLC’s latest report, Removing Rightsizing Roadblocks, highlights how eliminating financial barriers can encourage older Australians to ‘rightsize’ by moving into more suitable, manageable homes, thereby, opening up much-needed housing for younger families.

The report, prepared with Ansell Strategic, outlines how changes to the Age Pension assets test and Commonwealth Rent Assistance (CRA) eligibility could prevent nearly 100,000 older Australians from being financially penalised for moving into retirement communities. Key recommendations include:

Raising the Age Pension assets threshold: Allow single homeowners who ‘rightsize’ to retain up to $550,000 in assets before their pension is affected (up from the current $314,000), with a corresponding increase for couples.

Removing the CRA purchase price cap: Eliminate the $252,000 incoming purchase price threshold for Age Pensioners moving into retirement villages, aligning CRA eligibility with that of residents in other senior communities.

According to RLC executive Daniel Gannon, these reforms could have far-reaching benefits:

Release 59,576 homes back into the Australian housing market.
Encourage an additional 94,000 seniors to access retirement village housing options.
Generate $2.95 billion in stamp duty revenue for state governments.
Reduce costs and demand on public housing, hospital and aged care systems.
Improve quality of life for older Australians as more move into age-friendly retirement villages.

“Prehistoric policies are locking older Australians in large family homes during a housing crisis when ‘rightsizing’ initiatives should be front and centre to ease pressure on housing and healthcare systems,” Gannon said.

“It’s absurd that policies written decades ago are expected to keep up with modern day house prices and cost of living. Older Australians risk losing their pension while younger people are in housing limbo.

“This election is an opportunity for the major parties to prioritise older Australians and fix a broken system to improve outcomes for everyone.”

Age Pension reform

Since 1994, median house prices in capital cities have soared by nearly 600%, yet the asset thresholds for the full Age Pension have only risen by 178% for singles and 193% for couples, leaving many older Australians ‘asset rich, cash poor’.

Current rules discourage seniors from downsizing to more suitable homes, trapping them in large, underutilised houses while younger families struggle to find housing. Additionally, long waitlists for Home Care packages mean many seniors cannot access the required support to age safely in place at homes no longer suited for ageing bodies, Gannon says.

Reforming the Age Pension policy would not increase government costs but would help seniors access more appropriate housing.

Commonwealth Rent Assistance reform

CRA has not kept pace with rising housing costs: In 1997, the CRA cap covered 55% of the median house price; today, it covers just 26%. If it had kept pace, it would be $550,000, and not $252,000.

Outdated eligibility rules mean seniors in retirement villages who receive the Age Pension lose access to CRA if they pay more than $252,000 for their unit, even though similar housing types are treated differently. “For example, people who are on the Age Pension and live in land lease communities are eligible for rent assistance from the Commonwealth, regardless of purchase price,” Gannon says.

Updating CRA rules would cost an estimated $244 million per year and primarily benefit seniors in certain local government areas, helping them move into more suitable housing while freeing up larger homes for younger families.

Main image: The Verge at Burleigh Gold Coast Retirement Village (Source: Removing Rightsizing Roadblocks report - Retirement Living Council)

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