Anthony Albanese’s new law to try and get boomers to sell their homes

Pensioners wanting to downsize their home will have an extra year before their payments could be affected by asset testing in a bid to free up houses for younger families.

The Albanese government will on Wednesday introduce laws to enable the policy change to the lower house.

The legislation will extend the assets test exemption to 24 months for principal home sale proceeds. 

The additional 12 months will give retirees more time to purchase, build, or renovate a new home before the pension is impacted.

More than 8000 retirees moved into a smaller home in 2021, with the government hoping this figure will rise if the bill becomes law.

Social Services Minister Amanda Rishworth said the legislation would benefit the thousands of pensioners opting to sell their houses.

“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.

 The Albanese government will on Wednesday introduce laws to enable the policy change to the lower house.

“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.”

Changes include slashing the deeming rate for the money from sales to be used for a new residence from 2.25 per cent to 0.25 per cent a year.

Pensioners intending to use the proceeds from selling their home to purchase or build another home are currently only exempt from the social security assets test for up to 12 months.

But a one-year extension is available for unforeseen circumstances, including a natural disaster.

During the exemption period only the lower deeming rate (0.25 per cent) will apply to these sale proceeds in the income test.

The government previously committed to freezing deeming rates at their current levels for two years, to June 30, 2024.