Changes to restrict the use of limited recourse borrowing arrangements (LRBA) for residential property inside an SMSF were expected prior to their announcement, but a cohort of industry bodies has responded with a push for a carve-out for newly constructed homes, SMSF Association chief executive Peter Burgess has said.
Speaking at the opening session of the association’s Technical Summit 2026 in Sydney today, Burgess added the move was always likely in light of the proposed changes to negative gearing and capital gains tax (CGT), given the antipathy the government and Greens had shown towards the SMSF borrowing arrangements in the past.
“From the day the budget was handed down, we thought it was unlikely that LRBA rules would remain unchanged because holding property in super was attractive to spruikers,” he said.
“We knew it was only a matter of time before the Greens would give it a go again as they have been trying to ban LRBAs for a while now.
“With a reported increase in spruiking activity before the budget, they had what they needed to push for a ban on LRBAs.
“The government, who historically has not been a fan of LRBAs either, decided this is what they should do and this was done as a deal to ensure the budget passed through parliament.
“Spruiking was the issue the Greens raised and our response is if spruiking is the problem, address that conduct, not introduce new rules that restrict flexibility and choice.”
In response to the move, he said the SMSF Association had joined with the Australian Finance Industry Association (AFIA), Housing Industry Association, Master Builders Association, Mortgage and Finance Association of Australia, Property Council of Australia and Urban Development Institute of Australia to push for changes to the residential property ban after noting its impact on housing supply, which did not appear to be correctly modelled by Treasury when it put the change to government.
“The government did comprehensive modelling of the impact of the negative gearing and CGT changes on the supply of properties. They did no comprehensive modelling on the LRBA changes, which may have a bigger impact on the supply of housing,” he added, pointing to AFIA modelling that showed more than 16,000 new residential LRBAs were written in the last financial year, four times higher than ATO estimates.
“What we’re hoping for is an amendment to carve out new houses from this ban. That would align with the government’s own housing policy, which makes a clear distinction between new properties which add to the supply of housing and existing properties.
“The coalition is on board with this, so the government does not need Greens support because they won’t support new properties if there may be property spruiking, but I’m not sure the government will be prepared to upset the Greens around this issue.
“They may not need them for this amendment, but are going to need them for other bills because the Greens hold the balance of power in the Senate.”
Jason Spits
SENIOR JOURNALIST
Jason is a senior journalist with Benchmark Media and writes for the selfmanagedsuper website and magazine and smstrusteenews website. He has covered financial services since 1999 and has written about life insurance, superannuation, investment management and financial advice, in both a freelance and in-house capacity, and also did a brief stint as a media manager for an industry association. He has been the editor of trade titles Money Management and Financial Standard, and was most recently senior journalist with life insurance title Riskinfo.
Articles by Jason