During his election campaign launch speech, the Prime Minister announced the Coalition's plan to rejig an existing housing policy that allows older Australians to make a post-tax contribution into their superannuation fund after selling their home.
Currently, people aged 65 and older can contribute up to $300,000 post-tax into their super from the proceeds of their sale.
Under the updated policy, from 1 July 2022 the age cap for this policy would be lowered from 65 to 55, allowing Baby Boomers and even some Gen X's to jump on it.
This would open the door for roughly an extra one million homeowners.
Mr Morrison said the idea behind the policy is to "increase the opportunity for people to downsize, and increase the supply of family housing stock in the market".
"We know that for many older Australians there comes a time that that three or four bedroom house, well, it’s just a bit big. It’s more than what you need. And more than what you really want to look after anymore," Mr Morrison said.
"We want to remove the barriers to senior Australians downsizing to residences that better suit their needs and their lifestyle."
The current policy also exempts the proceeds of the sale from the pension asset test for one year after the sale takes place.
Under the rejigged policy, from 1 January 2023 this exemption period would double to two years.
"[This would give] seniors more time to plan and help them look to downsize while maintaining their pension, so they don’t have to worry about that," Mr Morrison said.
"This will align the pension assets test for people not entering aged care with those who are, with a uniform two year exemption from the assets tests after downsizing, as well as giving senior Australians greater certainty and more time to adjust to those new circumstances."
This tweaked policy was supported by Opposition Leader Anthony Albanese, though he noted it was a "modest" policy.
"This suggestion by the government is a practical one," Mr Albanese said.
"We will support it, but we will have much more in our offer to the Australian people next Saturday."
New policy met with praise, but did it slightly miss the mark?
National Seniors Australia has welcomed the updated policy, but said there's an additional step required to make this policy work for older Australians.
National Seniors Chief Advocate Ian Henschke said even before the upcoming election, the not-for-profit organisation has been rallying for changing policy to allow older Australians to downsize into the right kind of home, and staying out of 'costly' residential aged care.
"We suggested restricting eligibility to people who were aged 80 and over, were eligible for a Home Care Package and had owned their home for more than 10 years," Mr Henschke said.
"A recent survey found 92% of Australians want to remain and be cared for in their own home as they age."
Mr Henschke said the downsizing policy will only work if housing supply increases, so that all Australians will benefit.
"We know there is an untapped supply of larger homes more suitable for younger families than older Australians, many who struggle with the physical demands of the upkeep required to maintain a larger home," he said.
More to come...
Also read: Labor's shared equity scheme: Is it the key to housing affordability?
Advertisement
Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.
| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Additional Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
6.04% p.a. | 6.08% p.a. | $3,011 | Principal & Interest | Variable | $0 | $530 | 90% | 4.6 Star Customer Ratings |
| Promoted | Disclosure | |||||||||
5.99% p.a. | 5.90% p.a. | $2,995 | Principal & Interest | Variable | $0 | $0 | 80% | Apply in minutes |
| Promoted | Disclosure | |||||||||
6.09% p.a. | 6.11% p.a. | $3,027 | Principal & Interest | Variable | $0 | $250 | 60% |
| Promoted | Disclosure |
Image by Jeremy Bezanger on Unsplash
Ready, Set, Buy!
Learn everything you need to know about buying property – from choosing the right property and home loan, to the purchasing process, tips to save money and more!
With bonus Q&A sheet and Crossword!
Harry O'Sullivan
Denise Raward
Harrison Astbury
