Government to free up housing for young families by helping pensioners downsize
The federal government has introduced new legislation aimed at helping pensioners downsize their homes, which it hopes will make more housing supply available for young families.
The proposed changes will extend the asset test exemption on home sale proceeds to 24 months, giving older Australians more time to purchase a new home before it impacts their pension payments.
Under current rules, sale proceeds are exempted from the asset test for just 12 months, with an extra 12 month extension available in the event of unavoidable delays.
The government also plans to lower the deeming rate on sale proceeds from 2.25 per cent to 0.25 per cent per annum. This is the assumed rate of income from financial assets used to calculate pension payments.
According to social services minister, Amanda Rishworth, the changes would help thousands of Australians downsize their homes and improve access and affordability for families looking to buy in an overpriced market.
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“We don’t want people putting off downsizing to a more suitable home because they are concerned about the impact it could have on their payment rate and overall income,” she said.
“These changes will give pensioners more flexibility to find a suitable new home and it will hopefully free up larger housing stock for younger families who need it.”
Pushing out the asset test exemption period was first proposed by
the Coalition government ahead of this year’s election. At the time, then opposition leader Anthony Albanese said the Labor government planned to match the policy.
More than 8,000 pensioners downsized their homes last year, a number the government hopes will go up due to the proposed legislation.
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