Stamp duty traps empty nesters in homes that no longer suit their needs

Empty nesters Michael and Leisa McLennan are finding themselves stuck in a five-bedroom family home with a pool in the suburbs, despite their desire to downsize into something smaller that requires less maintenance. The couple, who have two adult children and a third likely to leave soon, are hesitant to make the move due to the tens of thousands of dollars in stamp duty they would have to pay.

"Instead of giving that money to government, we could buy ourselves a new car, we could have multiple overseas holidays, or we could renovate the house," Mr McLennan said. "It doesn't feel right that there are effectively significant financial penalties for someone such as us to move out of a five-bedroom house to move into, say, a three-bedroom apartment."

The McLennans are not alone in their concerns, with many Australians facing similar dilemmas. Economists and the federal housing minister have called for stamp duty to be phased out, but state governments collect billions of dollars a year from it. Some states have introduced concessions or exemptions, but Queensland, where the McLennans are based, is not considering it.

Treasurer David Janetzki said the government was focused on no stamp duty for first home buyers on new homes, as well as other home ownership schemes. However, Brendon Radford, director of policy and research at National Seniors Australia, believes that a "modest" senior stamp duty concession could encourage more people to downsize.

"The cost of moving is among the biggest barriers to people who want to downsize," Dr Radford said. "The stamp duty on a million-dollar home can vary across Australia from the $30,000 mark to more than $50,000 in some jurisdictions."

Urban planning expert Rachel Gallagher agrees that a lack of suburban housing diversity is a major issue keeping people from downsizing. She suggests that changes to minimum lot sizes and a complete rethink of the city's low-density residential zones could incentivize medium-density development.

"As a planner, I like to judge things by their impacts," Dr Gallagher said. "It makes no sense to me that you can't build a duplex, but you can build a seven-bedroom house with a 10-car garage."