Concerns have been raised over the Federal Government’s Home Equity Access Scheme, formerly the Pension Loans Scheme, with residents of land lease communities not eligible for the program.
The scheme – which allows older Australians to take out voluntary non-taxable fortnightly loans from the Government against the value of their homes, up to a maximum 150 per cent of the value of the Age Pension – received several changes as of the start of the year, including a cut in the interest rate from 4.50 per cent to 3.95 per cent per annum.
According to Families and Social Services Minister Anne Ruston (pictured), the scheme is accessible to “all retirees” who suit the circumstances, not just pensioners.
“Home ownership is a bedrock of our society with Australians working hard to accumulate wealth in the form of real estate equity.
“The Home Equity Access Scheme allows Australians over the Age Pension age – whether they are pensioners or self-funded retirees – to unlock this equity using a trusted Government product to boost their disposable income in retirement,” she said.
However, residents of land lease communities – who own their houses, but not the land they sit on – are ineligible to participate. In emails seen by the Courier-Mail, a spokesperson for the Minister said that the scheme was only available to retirees who hold the title on their land.
“As loans under the scheme are generally repaid only when the securing property is sold, or out of the person’s estate, this ensures the security is likely to be adequate over the long term and the debt can be recovered.
“Properties using land lease, leasehold, or loan licence arrangements do not constitute land ownership, and cannot be used as security for the purposes of the scheme,” the spokesperson said.
More changes are coming to the scheme in July, including the ability to bring forward lump sum advances and a guarantee that participants will not have to repay more than the equity they hold in the property used to secure the loan.
