Retirement-village residents may be disadvantaged by current policy on eligibility for Commonwealth Rent Assistance, reports this paper examining potential inequities in rent assistance for older people across different types of housing.

This report is concerned with policies on Commonwealth Rent Assistance (CRA) for older people living in retirement villages, manufactured home parks and caravan parks. There have been concerns that eligibility criteria for CRA may have become inequitable across these different forms of housing because of changes in costs and tenure arrangements over the last decade.

The study was commissioned by the Australian Government Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) to inform CRA policy development. It provides information on financial and tenure arrangements in the different types of residential setting, and on the socio-economic and financial circumstances of residents.

The research involved:

* a review of the literature;

* a telephone survey of operators of a national random sample of the three forms of non-standard accommodation; and

* a paper-based survey of residents in the village/park sample.

The study found that since an earlier SPRC study carried out in 1998, increases in the level of entry contributions in retirement villages have outstripped the annual updating of the Extra Allowable Amount (EAA) threshold which acts as the primary criterion for eligibility for CRA. Only three per cent of retirement-village residents appeared to be eligible on these grounds. The EAA criterion does not apply to MHP and caravan park dwellers, but if it did a much higher proportion would be eligible. Even allowing for over-representation of for-profit (and therefore potentially higher cost) villages in the sample, over time the costs of retirement-village entry are taking residents out of eligibility for CRA.

Retirement-village residents in particular are also subject to widely varying but often substantial deferred management or departure fees, as well as retention by management of a proportion of any capital gains. Most MHP residents, by contrast, would normally retain all or most of the purchase price and any capital growth on the value of their housing, although some would appear to face significant departure fees too. Caravan park residents are not normally subject to deferred management or departure fees.

On the basis of these findings, there seems to be some justification for the view that retirement-village residents may be disadvantaged by current policy on eligibility for CRA compared to those in MHPs, especially when deferred management and departure fees are taken into account. Some retirement villages attract a higher income and higher asset clientele that puts them clearly out of eligibility for CRA, but for others their financial circumstances are similar to those of MHP residents who pay lower departure fees (if any) and mostly retain capital gain achieved on sales. MHP residents tend to pay significantly higher recurrent charges than do retirement-village residents, but this is often made up for by receipt of CRA.

Better-off retirement-village residents were somewhat over-represented in the survey sample, but even amongst these many were ‘asset-rich’ but still ‘cash-poor’, especially once the costs of paying for additional and often essential services were met. Even this asset base was often undermined by deferred management fees, and there is a strong case for great transparency and consistency across the retirement village sector in the application of these fees.

Written by Dr Tony Eardley, Dr Kathy Tannous, Dr Denise Thompson and Theresa Mourad, with assistance from Dr Elizabeth Ayres.