Older Australians could help ease the housing crisis – and improve their own quality of life – if outdated pension rules were reformed, according to a new report by the Retirement Living Council (RLC).

The report, Removing Rightsizing Roadblocks, highlights how simple changes to government policy could unlock more than 59,000 homes currently held by older homeowners who are reluctant to downsize due to financial penalties.

‘Rightsizing’ – moving from a large family home into a smaller, more manageable place like a retirement village – is something many older Australians want to do. But strict pension asset limits and limited access to rent assistance are making that move financially unviable for many.

The RLC is now calling on political leaders to commit to two key reforms ahead of this week’s Federal Election on 3 May:

  • Increase the Age Pension asset threshold for single homeowners from $314,000 to $550,000 (with an equivalent increase for couples), allowing more people to rightsize without losing pension benefits.
  • Remove the outdated $252,000 purchase cap that prevents retirement village residents from accessing Commonwealth Rent Assistance – a benefit already available to seniors in other types of housing, like land lease communities.

RLC Executive Director Daniel Gannon said these changes could encourage more than 94,000 older Australians to make the move into retirement communities, freeing up tens of thousands of larger homes for growing families.

“Right now, outdated rules are trapping older Australians in homes that no longer suit their needs,” Mr Gannon said.

“These are people who are asset-rich but income-poor, and are often stuck paying for homes they can’t manage – while younger families are left struggling to find enough space.”

The report, developed with aged care consultants Ansell Strategic, found the average home that would be released through rightsizing is valued at $825,000, typically featuring three or four bedrooms in outer suburbs – ideal for family buyers.

The proposed reforms could also deliver nearly $3 billion in additional stamp duty revenue for state governments and reduce pressure on public housing, hospital, and aged care systems.

“This isn’t just good policy for older Australians – it’s good for the whole community,” Mr Gannon said.
“It’s about creating housing options, freeing up supply, and helping people live in homes that match their stage of life.”

The RLC argues that while the property market has changed dramatically over the past 30 years, government policy has failed to keep up. For instance, while house prices have risen nearly 600% since 1994, pension asset limits have increased by less than 200%.

The cost of modernising rent assistance would be around $244 million per year, the report estimates – a modest price tag compared to the scale of the housing and aged care challenges Australia faces.

With more than 80,000 people currently waiting for home care packages, the RLC says helping seniors move into better-suited housing could also ease strain on in-home support services.

“This is a chance to modernise the system and offer older Australians the dignity of choice,” Mr Gannon said.

“We’re calling on all parties to put this issue on the table before the next election.”

For more information and to read the full report, visit: retirementliving.org.au