Facts you Need to Know About Home Ownership and the Age Pension

Who said your home is not taken into account when you are assessed for your pension? It does count and more weight should be put on it than it currently does.

New Pension Law
Under the new pension assets test incorporated into the Social Security Act, which takes effect on 1 January 2017, your home counts for $200,000.

For example, a single homeowner can own $250,000 in assessable assets before they begin losing the pension. For a single non-homeowner, the cap is $450,000. The threshold for a couple who own a home is $375,000, while a couple with no home is allowed $575,000.

This means that whether you are single or part of a couple, the value of homeownership is $200,000 under the new pension assets test.

The change is not much, as under the old law, the cap for a single homeowner was $209,000, $360,500 for a single non-homeowner, and $296,000 and $448,000 for couples.

So, homeownership was valued at $151,500 under the old assets test.

Under the new assets test, both the value of homeownership and threshold has increased.

The changes will not result in people losing their full pension. In fact, 50,000 more individuals will get it.  An extra 120,000 part-pensioners could see a rise in payments.

However, hundreds of thousands of Australians will also say goodbye to the part pension starting 1 January 2017, as much higher taper rate will take effect.

Pensioners stand to loose $3 every fortnight per $1000 in assets over the pension cap. That taper rate is similar to the one in effect 10 years ago before it was amended to a more-generous $1.50 in the 2006 budget.

So a single homeowner will say goodbye to their pension if they have $542,500 in assets, while singles with no homes are allowed $742,500. The threshold for couples is $816,000 if they are a homeowner and $1.106 million if they’re not.

Again, the value of homeownership is roughly $200,000. 

The new rules are much stricter or much more targeted compared to the past threshold, depending on your outlook. The old limit allowed couples to have $1.175 million on top of the family home and still collect a part pension.

But regular indexation of the pension, which happens every March and September, applies to these thresholds. The exact limits will be known in late October 2017, when the new pension rates are announced by the Department of Social Security.

About 90,000 individuals are likely to loose their part pension, while an additional 235,000 will see their payments cut.

Home ownership should count more
The new rules would affect some people, but the fact is pension reform should be further expanded, home ownership, in particular, should count for far more than $200,000.

Nothing would be left of the $200,000 in eight and a half years for a renter in Newcastle, where the median rate is $470 per week for a house, or $420 for an apartment. And this is taking into account the unlikely scenario that rent would not increase in that time period.

Renters in Melbourne would have closer to a decade, with a $400 a week median rent for a house and $390 for apartments.  But renters in Sydney would have nothing left in just seven years.

Baby Boomers
Retirees with homes may not own much liquid assets, but retirees with no home should have a right to more assistance than they are currently getting.

Intergenerational fairness is also at play here. A lot of Baby Boomers have become very rich, thanks to the property boom in the late 1980s. They may not feel rich, but it’s all relative.

People are discouraged from downsizing to release their capital due to quarantining the family home from the pension assets test and other tax schemes such as capital gains tax.

However, Baby Boomers comprised a good portion of the population that whether they buy, sell or hold, the market can get distorted. If they are living in properties that are larger than what they need to not lose their tax and pension benefits, this cuts off the natural supply in the housing market.

Building new houses can only help minimally as majority of the people purchase second-hand homes and there is very little land available in Newcastle without going to the outer suburbs.

There is merit to the idea of exempting the family residence from the pension test. This is because pensioners have to live somewhere, rather than safeguard one form of assets for inheritance purposes.

The Gen X and Gen Y are satisfied with being the tax base for the age pension, as assisting our fellow citizens in retirement age is part of being in a society. But many of us are feels wronged, and rightly so, for helping rich property owners get pension while we don’t have enough to pay for a home of our own.

Tips to Keep your House Cool and Save Energy

 

You probably immediately reach for the air-conditioning once the mercury rises. However, one part of your brain keeps telling you to bear the heat, and consider the environment and also your wallet.

Don’t worry. There are many simple and energy-saving ways you can keep your house cool during the summer months. Here are some of them:

Passive cooling
Also called non-mechanical cooling.  Passive cooling is the cheapest way to cool a home both financially and environmentally.

Basically, it regulates heat gain and helps heat to scatter in a home or property through its layout, hence raising indoor temperature and comfort levels using small or even zero energy consumption.

You can design or modify your home in many ways to achieve comfort with passive cooling. There are also hybrid methods that use mechanical cooling units such as timed use of your air-conditioning.

What are the home design elements that power passive cooling?

The climate largely influences the kind of steps you need to apply passive cooling. You’ll have to consider whether you simple cooling is all you need, or you need both cooling and heating systems for the warmer and colder months.

Consider the following to achieve passive cooling:

  • Your home’s orientation
  • Utilising lighter-hued, reflective roofing materials
  • Screening your walls, windows and roofs against direct sunlight
  • Creating buffer zones
  • Controlling air ventilation
  • Taking thermal mass into account

Insulation
Good insulation is needed to allow a building to resist heat. And the roof is not the only area in your home that needs insulation; there are also the walls, floors, doors and windows.

Naturally, different materials possess different insulating properties. For example, a double brick house will keep heat differently from a brick veneer house.

Also playing a role in encouraging or discouraging heat is the building’s aspect and position in relation to the sun, and other factors such as shade from trees. It is easy to plan a good insulation if you are constructing a property from scratch. However, majority of people cannot afford this.

Here are some inexpensive ways you can insulate your home:

  • Use awnings, shutters, louvres or screens to shade your home’s east, north or west facing windows
  • Putting up thick blinds or curtains
  • Installing a protective tint to glass doors or windows
  • Closing gaps to block heat

Open or close?
People do one of two things when the hot weather arrives:

  • Open their windows and doors to chase the heat
  • Shut them in the early morning to keep heat out

Both actions are right!

Chances are high for a home that is well insulated to benefit from shutting down blinds, windows and doors to keep heat out. But for homes that are poorly insulated, the best way to go is open up and hope to catch a breeze.

Air circulation
You can also bring down the temperature inside your home with the help of roof ventilation. Depending on the type of your home, you might look at putting roof installation and eave vents, or a form of roof whirly bird to help in allowing the hot air to flow out.

Whichever way you go, the smart thing to do when the cool of the southerly breeze arrives is to open up all windows and doors to allow the temperature in your home to drop down naturally overnight.

Reduce heat generating activities
Common sense tells you not to eat roast for dinner if the temperature outside is high. So instead of using the oven, consider an outdoor BBQ.

It seems simple, but limiting the use of heat generating appliances can help resist heat. And it is not just ovens and stoves. Virtually all appliances generate heat, including dishwashers, computers, dryers, TV, lights and more.

Help from other devices
Freestanding or ceilings fans can greatly help in bringing relief during hot weather. Turn them on or use them in tandem with a thermostat controlled air condition.  

If your air-conditioner is old consider buying a newer model with energy-efficient features. If it is your first-time getting an air-conditioner ensure that you purchase the right one. For example, note that evaporative is not ideal for a humid environment.

Ensure that you also get the right size for your property, so it isn’t wasting energy cooling it down.

To get the full effect, consider using energy consuming systems like air-conditioners in tandem with passive cooling methods (such as the ones mentioned above) and always keep it properly maintained to ensure its longevity and efficient and economical functions.

 

Tips to Prepare your Home for a Spring Sale

Brace yourself for pent-up demand if you are looking at selling your home this spring. This is because home owners believe that spring is the best time to sell and may want to make a move before home prices or interest rates increase.

There are three things that sell a home on any given season: location, condition and price. Your home may not sell if one of those three things is undesirable. However, you can always way up for a less popular location with a better price.

Sell your home this spring by following these five simple tips:

Focus on curb appeal
It only takes a buyer 27 seconds to decide whether they like your home or not. People will immediately know if something is amiss, so ensure that the first impression is a good one!

Trim trees and bushes to allow buyers to see the house. Pressure wash the driveway, front path, windows, house and patio. You should also consider cleaning and painting the front door and even your letterbox.

Reduce your possessions
Go through your furniture and closets to get rid of clutter and then make another pass through. If you have 15 coats, you have to cut it down to 2 or 3 to make your closet appear larger. Pack up all the items you want to keep and store it in an off-site pod or storage unit.

Pay attention to the senses, particularly sight and smell. If your house has dark corners, freshen and lighten up with a bright paint colour or even just a small lamp.  Be mindful of  pet odours by vacuuming regularly.  

Make pre-inspection repairs
Fix anything broken that you know a building inspector would find. Best idea is to have your own report done prior to listing your home on the market.

Attach the right price
Generally speaking, home values are increasing in Newcastle. Sellers should compare their home with similar properties that have recently sold. Today’s buyers are smart so don’t ruin your chances of selling at a premium price by marketing you home too low and missing out on extra money or too high and scaring them off.

Enlist the help of a marketing professional
These days it is not enough to advertise your home on the internet and erect a sign out the front.  You need a marketeer to promote your property so it stands out from everyone else!

This means professional photography, floor plans, video or infomercial, brochures, social media campains and even specific choice of words that google uses to elevate your properties ‘ranking’ on the internet!

An increasing number of buyers are utilising tablets and mobile phones to look for homes, so make sure marketing materials are easily available from those devices as well.

So sit back and play my infomercials below to gain an idea of how your home could be marketed.