Inconsistent and outdated: We must revamp rent assistance, not just raise it

A report released last week by the Grattan Institute has recommended a 50 per cent increase to Commonwealth Rent Assistance to “lift retirees out of poverty”. The report, Renting in retirement: Why Rent Assistance needs to rise, recommends increasing the maximum rent assistance payment by $53 a 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 about $2 billion a year, with about $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 who are not private renters, the report misses the opportunity to address 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 multimillion-dollar yacht, houseboat or in a land lease community and have another $1 million of assets outside their home and still receive the maximum rent assistance payment.

The government has increased rent assistance by 27 per cent above inflation in the past two federal budgets, but the maximum fortnightly payments – $211 for singles and $199 for couples – still fall short of meeting the rising cost of rent.

The report shows that a cheap one-bedroom home in a capital city is about $350 a week, but a single age pensioner receiving rent assistance can afford only $300 a week. The result is that two-thirds of retirees who rent privately live in poverty, and an increasing number of seniors are becoming homeless.

Clearly, change is needed. But it must go beyond short-term increases to rent assistance payments. The eligibility rules for rent assistance are outdated and inconsistent, creating unfair advantages for some retirees while leaving others struggling.

Rather than applying a short-term fix, policymakers must consider broader reform to ensure all retirees – regardless of their housing choice – have access to the support they need for a secure and dignified retirement.

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