A QUT economist has proposed a way to alleviate the housing crisis and help seniors remain in their home for longer, as Australia hit an all-time low for housing affordability this week.
Making the Most of Your Spare Bedrooms
At the same time, citing millions of under-used bedrooms in Australian homes, Dr Lyndall Bryant from QUT’s Centre for Justice and School of Economics and Finance argues that a more efficient use of existing housing stock is the way forward. She said her research shows 84% of Australians aged over 65 are homeowners, and three quarters of these houses have three or more bedrooms — most of which are being underutilised.
Dr. Bryant hopes that by providing financial incentives for these older homeowners to share the empty rooms in their homes with renters, we can help ease the pressure on both fronts-creating more affordable housing for all and also reducing costs of living burdens among struggling seniors. Research earlier this year found that a large proportion of older Australians are ‘asset-rich but income-poor’,—and an increasing number face homelessness despite being homeowners. Renting out a room could be a significant financial boon, it would also be playing at least some sort of role in alleviating the country’s extreme housing shortage.
Solving Roadblocks, Unpacking Potential
Although, as Dr. Bryant notes, there may be a few obstacles that stand in the way of older homeowners renting out their spare rooms—they have a right to remain at home without fear of sharing their space-taxation concerns, loss of pension eligibility and potential capital gains tax matters. Nevertheless, she thinks those barriers can be overcome with the right kind of policy intervention.
The Australian Tax Office already has guidelines in place that exempt “domestic arrangements” and “homestay” programs — situations where board and lodging is given in exchange for services, without the income being taxed. For example, the Work Bonus scheme permits pensioners to earn more money without affecting their pension payment. Fortunately, according to Dr. Bryant it may not be too difficult; for frameworks as they already exist could be adjusted to embrace rental income from spare bedrooms.
In response to concerns over capital gains tax, she suggests a temporary “tax holiday” that would grant homeowners two or three years’ grace during which they could rent rooms out without putting themselves at risk of generating extra tax bills when and if the property is sold in future.
If we can break down those barriers and offer people some really clear incentives, then Dr. Bryant thinks we have a treasure trove of spare bedrooms at our disposal, with the potential to transform the lives of older homeowners and rebuild affordable housing for those younger families currently locked out.
Conclusion
The issues associated with this are manifold and complex, however Dr. Bryant’s solution is genuinely innovative and practical and would seem to have the potential for wide ranging benefits. Encouraging empty nesters and retirees to rent out under-occupied homes is a win-win solution, providing much needed low cost housing supply and giving older Australians financial help when they need it most. If the right policy frameworks and protections are adopted, this win-win solution could become a game-changer in an era of financial stress for millions of American households.
