Budget move to encourage seniors to downsize is a good start but not enough: Mary Wood

This week's budget announcement that older Australians will be able to unlock equity in the family home without affecting their pension is welcomed by the Retirement Living Council(RLC), a division of the Property Council of Australia.

Under a pilot scheme, some Australians aged over 65 will be able to sell their family home in order to downsize without losing out on the aged care pension.

The current pension assets test deters people over 65 from moving into retirement villages or downsizing.

As a result of staying in a larger home for longer than they want to, many older Australians suffer from loneliness, isolation and have difficulty accessing age-friendlyservices.

The announcement provides a pathway for older homeowners who wish to downsize and supports the changing housing preferences of older Australians.

However, it falls short of meeting the needs of the majority of pensioners.

It empowers some older Australians to choose where and how they want to live, however, only a sliver of those who would utilise this scheme.

The proposed eligibility requirements, which includes the stipulation that applicants must have owned their home for at least 25 years, is overly onerous and don’t reflect the needs and circumstances of most aged pensioners.

Unfortunately, the pilot program also fails to capitalise on the equity released under this scheme.

While the pilot program will aid older Australians to downsize, it does nothing to deliver new housing supply.

This pilot program would have been a perfect opportunity to trial a financial instrument such as housing bonds to support the delivery of new affordable housing to match the needs of the ageing population.

The announcement has recognised the issue, but fails to deliver the housing Australians need.

RLC would welcome the opportunity to work with government to refine the scheme to ensure it better matches the needs of older Australians.

Mary Wood is executive director of the Retirement Living Council.