The FY27 NSW Budget decision will help attract global capital into retirement projects that deliver long-term supply and support the needs of a growing older population.
According to the latest PwC-RLC Retirement Census, 41% of retirement villages across the state are now reporting waitlists, highlighting the need for greater investment.
RLC Executive Director Daniel Gannon said the reform sends a powerful signal to investors, governments and the broader community.
"The NSW Government has recognised a simple reality - if we want more retirement communities, we need more investment to build them," Mr Gannon said.
"Capital goes where it is welcome, and where the investment case is clear. This reform sends the right signal and will help attract the long-term capital needed to renew ageing villages, deliver new communities and expand housing choice for older Australians.
"We also know that NSW is responsible for 29% of all Australians currently on a waitlist for a retirement village - the biggest contribution of all states.
"At a time when housing demand is growing and the population is ageing rapidly, governments can't afford to put barriers in front of investment that increases housing supply.
"Importantly, this decision also recognises retirement living for what it is - essential infrastructure.
"These communities don't just provide homes. They help older Australians thrive because village residents are 41% happier, 15% more physically active, twice as likely to catch up with family and friends, five times more socially active, and experience lower levels of loneliness and depression."
Almost 60,000 people already live in retirement villages across NSW, while the number of residents aged over 75 is forecast to grow from 649,000 today to 1.1 million by 2040.
"The benefits extend well beyond retirement villages themselves because when older Australians choose to 'rightsize' into a retirement community, they free up larger homes for younger families and help improve housing availability across the market," Mr Gannon said.
"This is housing policy, ageing policy and health policy working together - a tide that lifts all boats.
"You can't support an ageing population without building the communities designed for it. And you can't build those communities without investment.
"Treasurer Daniel Mookhey has made a strong stance to support older people and, in doing so, is now setting the national pace."
