Merilyn Vale, Coast Community News

Central Coast Councillor Doug Eaton wants the Australian Government to introduce a system to incentivise retirees to rent out vacant rooms in their family home to alleviate the existing rental crisis.

He says such incentives could include exemption of rental income from income tax and pension allowable income and exemption from capital gains tax that would otherwise arise from the rental of the family home.

He said the family home was exempt from capital gains tax but this exemption was lost in part if the home was part rented.

Similarly the rental income received is assessable income and subject to tax and this could reduce or eliminate the pension. Cr Eaton said the financial impacts made renting out a room in the family home unviable.

“Removing these impacts for say one room for homes owned by retirees and pensioners would do a lot to alleviate the housing and rental crisis with around 200,000 rooms becoming available if just 1 per cent of housing stock took up the opportunity,” he said. 

“Putting more people into existing housing supports existing communities, more customers for the local businesses and reduces the demand for new infrastructure.”

Council will put his suggestion to the National General Assembly of Councils later this year after the Liberal and Team Central Coast councillors supported the idea at Council’s January 27 meeting.

Labor Councillor Sharon Walsh said she was extremely disappointed with the decision.

She said it was a misdirected solution to the housing crisis that could make older homeowners vulnerable to elder abuse.

“The most serious and overlooked consequence of Cr Eaton’s proposal is its potential to increase the risk of elder abuse, financial exploitation, and coercive housing arrangements involving older people,” she said.

“By introducing strong financial incentives – particularly exemptions tied to pension eligibility and tax liabilities – the motion creates structural pressure on retirees and pensioners to monetise their homes, regardless of their personal safety, capacity, or wishes.

“This is especially concerning given that: elder abuse is already under-reported and rising, particularly financial abuse involving housing and assets; older people experiencing financial stress, social isolation, cognitive decline, or reliance on family or carers are especially vulnerable to coercion; and housing insecurity among younger family members can lead to implicit or explicit pressure on older homeowners to ‘rent out a room’ to avoid guilt or conflict.

“What is framed as a ‘voluntary incentive’ risks becoming a de facto expectation, particularly for pensioners struggling with cost-of-living pressures.

“This undermines older people’s right to security, autonomy, and safety in their own home.”

Cr Walsh said the Motion was silent on: protections against coercion by family members, carers, or third parties; monitoring or reporting mechanisms for financial or psychological abuse; capacity assessments or informed consent processes and access to independent advice for older people entering such arrangements.

“Without robust safeguards, this policy risks normalising arrangements that blur the line between housing support and exploitation,” she said.

“At its core, this proposal asks the Australian Government to subsidise private wealth accumulation through the tax system, under the guise of housing supply, without any guarantee of affordability, security of tenure, safety, or suitability for renters.

“What Councillor Eaton is proposing is regressive policy design and he proposes that retirees should fill the gap by turning their homes into informal, unregulated boarding arrangements.

“This is not a housing strategy – it is policy abdication.

“Housing affordability is a structural market failure, driven by decades of investorfocused tax settings; planning decisions favouring profit over need; under-investment in public housing.

“It cannot be solved by relying on voluntary, atomised household decisions.

“The motion is silent on many critical issues, including: tenancy rights and protections; minimum standards and safety; privacy, security, and power imbalances; discrimination risks.”

Labor Councillor Margot Castles said the decision was an embarrassment to Council.

“My rationale is that this was not thought through properly and would do little or nothing to help the housing situation – hence an embarrassment to submit to the conference,” Cr Castles said.

“My major concern was, and still is, that it potentially leaves people vulnerable to exploitation.

“My research prior to the meeting indicated that for this type of arrangement to protect both the renters, and to all intents and purposes, the landlords (homeowners) then the following, for example, need to be in place: one, written rental agreements clearly covering what is expected on both sides; and two, landlord insurance.” 

This article appeared in Coast Community News, 5 February 2026.