Inconsistent and outdated: We must revamp rent assistance, not just raise it
A report released last week from The Grattan Institute has recommended a 50 per cent increase to Commonwealth Rent Assistance to “lift retirees out of poverty”. The report, titled Renting in retirement: Why Rent Assistance needs to rise recommends increasing the maximum rent assistance payment by $53 per week for singles and $40 for couples and indexing the rate in line with rent for the cheapest 25 per cent of homes in capital cities.
The recommendations would cost approximately $2 billion a year, with around $500 million going to retirees.
Policymakers must consider broader reform to ensure that all retirees – regardless of their housing choice – have access to the support they need.Credit: Dominic Lorrimer
The report focuses on private renters, with The Grattan Institute ignoring that rent assistance is a crucial payment for many retirees who are not private renters. To qualify for rent assistance you must be eligible for a government pension such as the age pension and be paying more than a minimum amount of “rent”.
Rent includes private rent, lodging, fees in a retirement village, site fees in a caravan park or land lease community and mooring fees. By ignoring retirees that are not private renters the report misses the opportunity to address the distortions in rent assistance eligibility criteria based on the nature of your accommodation.
Possibly the biggest anomaly in whether you can qualify for rent assistance depends on whether you choose to downsize into a retirement village or a land lease community. As a general rule, if you choose a retirement village, then you can only qualify for rent assistance if you pay $252,000 or less for your home in the village. These same rules apply if you downsize into a granny flat.
In contrast, if you downsize into a land lease community, there is no limit on your home value, you can pay $200,000 or $2 million and still qualify for rent assistance.
Change is needed. But it must go beyond short-term increases to rent assistance payments.
This is because in a land lease community you own your home and rent the land on which it sits. The same rules apply if you live in a caravan park or on a boat.
The report says that “rent assistance supplements the age pension for poorer retirees” but a couple could live on a multi-million dollar yacht, houseboat or in a land lease community and have another $1 million of assets outside their home and receive the maximum rent assistance payment.
