Labor is poised to introduce a new law to try to get older Australians to downsize and free up larger homes for young families struggling to afford a place to live. Here’s how it would work.
Australian pensioners will be encouraged to downsize and free up their larger homes for younger families under a potential new law.
Labor will on Wednesday introduce a Bill to parliament that would give age pension recipients more time before the proceeds from the sale of their homes affect their pension payments.
The Albanese government’s legislation would give pensioners an additional 12-month asset test exemption on their home sale proceeds.
Labor says the exemption is designed to give people more time to purchase, build, rebuild, repair or renovate a new principal home before their pension is affected.
Under the new Bill, the assets test exemption would be extended to 24 months for principal home sale proceeds, with an additional 12-month extension available in extenuating circumstances such as a natural disaster.
The changes would see the deeming rate on principal home sale proceeds that pensioners intend to use to purchase a new home significantly lowered from 2.25 per cent per year to 0.25 per cent per year.
The deeming rate is an assumed rate of return on financial assets which is used in determining pension amounts.
More than 8000 pensioners downsized last year and Labor hopes this number will increase if its changes are legislated.
“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,” Social Services Minister Amanda Rishworth 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.”
The legislation comes two months after ABS data revealed the number of spare bedrooms in Australian houses had increased from 12.7 million in the 2017-18 financial year to 13 million in the 2019-20 financial year.
Census data released at the end of June also revealed about one in 10 Australian houses were vacant, with the majority of those thought to be holiday homes and investment properties.
Labor can easily get legislation through the lower house, but it needs the support of the Greens and one crossbencher in the Senate in order to pass laws without the Coalition.
Article by the Courier Mail
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