Cost of stamp duty keeping Australians in homes they no longer want to be in - ABC News & Headlines – Australian Broadcasting Corporation

Michael and Leisa McLennan are ready for a change. (ABC News: Lottie Twyford)

More older Australians are looking to downsize but are put off by the large stamp duty they would have to pay.

Michael and Leisa McLennan want to move to a smaller home that requires less maintenance but have "significant concern" over the fees they would have to fork out.

Urban planning expert Rachel Gallagher says a lack of suburban housing diversity was another major issue keeping people from downsizing.

With two of their adult children having flown the coop and their third likely to do so soon, Michael and Leisa McLennan have found themselves in a bind.

After 14 years, the almost empty nesters want to downsize from their five-bedroom family home with a pool in the suburbs and move into something smaller, which requires less maintenance.

But the tens of thousands of dollars in stamp duty they would have to pay is a "significant concern" and may just be the thing which keeps them there.

The McLennans are considering turning to a new page. (ABC News)

"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 couple is also worried about what apartment living or townhouse living might be like in practice, having never lived in one before.

"We wouldn't want to be in a position where we buy something — we pay our stamp duty plus the other costs, and then in two years' time, we're having to go through all of that again because we weren't comfortable," Mr McLennan said.

The McLennans believe incentives like stamp duty concessions would encourage more people to downsize, freeing up larger homes for younger families.

Mr McLennan says he'd like to downsize into a home which requires less maintenance. (ABC News: Lottie Twyford)

Some economists and even the federal housing minister believe stamp duty is a bad tax and have called for it to be phased out, but state governments collect billions of dollars a year from it — revenue that has only increased as housing prices have.

South Australia has announced exemptions for over-60s who move into new builds. Only Victoria and the ACT offer stamp duty concessions for pensioners. 

In Queensland, where the McLennans are based, the government isn't 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.

Brendon Radford is the director of policy and research at National Seniors Australia. (ABC News: Mark Leonardi)

Offering a "modest" senior stamp duty concession has long been on the policy agenda for National Seniors Australia's Brendon Radford, who says repeated surveys over the years have shown the cost of moving is among the biggest barriers to people who want to downsize.

The stamp duty on a million-dollar home can vary across Australia from the 30-thousand mark to more than 50-thousand in some jurisdictions.

Dr Radford said the costs of a move, including taxes and legal fees, could quickly pile up, especially for people who were on fixed incomes like the pension, making the whole process less appealing.

Then there was the issue of what to downsize into and where to move.

He said many people were put off by the thought of leaving the communities they were connected to, or by the prospect of apartment living, which carried strata fees they may not be used to.

"Smaller developments like duplexes don't require strata fees," he said.

"And in the outer suburbs where you've got low density, we should be making the step towards higher density or medium density by building those kind of appropriate housing options that people understand better."

Rachel Gallagher is an urban planning expert at Griffith University. (ABC News: Mark Leonardi)

Urban planning expert Rachel Gallagher shared that sentiment, and said a lack of suburban housing diversity was the major issue keeping people from downsizing.

That's despite moves better to unlock that missing middle, or medium-density development.

Changes to minimum lot sizes, like recent tinkering in Brisbane in some areas, could incentivise that, Dr Gallagher said.

But she warned it needed to go further, calling for a complete rethink and overhaul of the city's low-density residential zones — areas that mostly permit only detached housing.

Dr Gallagher points out an example of infill development like townhouses built behind an older detached home. (ABC News)

"As a planner, I like to judge things by their impacts," she 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.

Brisbane City Council said it's not considering scrapping minimum lot sizes to bring medium-density development into low-density suburbs.

“Our approach is to support more housing density in well-located areas close to jobs, services and public transport, while protecting Brisbane’s low-density suburbs and bushland areas.”