The SMSF Association has joined with the housing industry to call on the government to allow SMSFs to continue using limited recourse borrowing arrangements (LRBA) for residential property where a new build is involved while the impact of a complete ban is properly assessed.
The collective action was flagged by association chief executive Peter Burgess at the industry body’s recent Technical Summit 2026 in Sydney as part of a campaign by it and the Australian Finance Industry Association, Housing Industry Association, Property Council of Australia, Real Estate Institute of Australia and Urban Development Institute of Australia to seek a partial overturn of the residential property LRBA ban that started on 10 August.
The industry bodies made the call in a joint statement, which stated data drawn from the housing sector indicates SMSF borrowing directly financed the construction of thousands of new homes and apartments each year, boosting home ownership and supporting the rental market.
The statement added while one-third of Australians currently rent, and rising costs of living were creating housing insecurity, the LRBA ban had a present-day impact on housing supply at aggregate and also affected intergenerational fairness and the financial well-being of many Australians.
“The housing and finance industry is urging the government, at a minimum, to permit SMSF borrowing for newly constructed homes while Treasury undertakes and publishes a comprehensive assessment of the impact of the ban on detached home commencements, apartment construction, project pre-sales, rental supply and progress towards the government’s 1.2 million homes target,” the group stated.
The call for further assessment of the impact of the ban follows the release of Australian Finance Industry Association data showing the number of new residential SMSF loans written in the 2026 financial year was more than 16,000, four times larger than the ATO’s average yearly estimate, raising doubts about the basis for the ban.
“Restricting investment in established homes still adversely affects new housing supply, but restricting finance for a home that has not yet been built means the policy reaches directly into the new-home market and contradicts the government’s own tax reforms designed to encourage new housing,” the group said.
“At a time when Australia is already struggling to build enough homes, there should be a clear and public justification for any policy expected to reduce the building of new homes.
“The review should also demonstrate a clear net public benefit sufficient to justify restricting Australians from using SMSF borrowing to build new homes.
“If the evidence demonstrates a clear net public benefit from extending the prohibition to newly constructed homes, the government can make that case publicly.
“Until then, SMSFs should, as a minimum, not be banned from borrowing for residential property and be allowed to continue to borrow to build new homes.”
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