Lenders and developers have warned that the government’s move to ban SMSF residential borrowing could prevent thousands of new homes from being built.
Shadow housing minister Andrew Bragg has used an industry roundtable to sound the alarm over the Albanese government’s decision to ban new self‑managed super fund (SMSF) residential borrowing, with participants saying that the measure risks stripping a crucial layer of capital from housing projects and knocking out thousands of dwellings a year from the construction pipeline.
Bragg brought together representatives from construction, real estate, project marketing, finance, non‑bank lending, investment platforms, and the SMSF sector in Canberra on Wednesday (1 July) to examine the impact of the ban on limited recourse borrowing arrangements (LRBAs) for residential property.
Pepper Money CEO Mario Rehayem and Firstmac Group chief financial officer James Austin were among those who joined the meeting.
Speaking at a press conference after the roundtable, Senator Bragg said the collective evidence from lenders and developers pointed to a much larger impact on new housing than Treasury’s high‑level estimates.
“We heard from number of industry bodies and businesses that are involved in finance, housing, and superannuation and what is extraordinary about our meeting is that it looks like as many as 10,000 houses a year are going to be lost as a result of the government’s ban on self-managed super funds investing in property,” he said.
Bragg said stakeholders stressed the importance of SMSF buyers in helping new projects reach presale thresholds required by banks and non‑bank financiers.
“The participants of this roundtable have found that SMSFs make up some 30 per cent of presales, required for construction funding to get housing projects off the ground. They are key to unlocking housing supply,” Bragg said.
“I would have thought that in a nation which needs a quarter of a million houses each year to house its residents, we should be doing everything we can to get new housing supply moving.”
Bragg also blasted the policy process, accusing the government of pushing through the measure without properly assessing its consequences.
“Extraordinary incompetence, bizarre but also, negligence. The government didn’t even bother to model the impact of this change they did with the Greens,” Bragg said.
He described the ban as “an insane judgement” and asked why the government’s primary tax legislation distinguished between new and existing homes, while the SMSF rule made no such carve‑out.
Non-bank lender says SMSFs finance ‘significant’ new supply
Austin, CFO at Firstmac Group, emphasised the importance of SMSF borrowing in securing the delivery of new supply, chiefly off-the-plan builds and new apartment projects.
“We’re the largest lender to SMSF funds. We do currently fund around 1,500 properties a year to new developments,” he said.
“So, it is a significant amount of new supply coming in.”
Austin also pushed back on suggestions made by the government and the Greens that SMSF property strategies were dominated by wealthy investors “hoarding” assets outside the mainstream tax system.
“The notion that SMSF investing is for wealthy people hoarding properties is just not true, mostly, this is where people have a deposit, they don’t have a deposit outside of superannuation, and it is a place where they can buy a property for their retirement,” he said.
“So, without this, it does take that away from them.”
SMSF Association calls for new‑build carve‑out
Peter Burgess, CEO of the SMSF Association, meanwhile, said that part of the ban should be redesigned to reflect the government’s own emphasis on supply.
“We think there’s a clear argument here for new properties to be carved out of this ban on self-managed super funds being able to borrow to invest in residential property,” he said.
Burgess said that Labor’s housing tax reforms had already drawn a line between new and existing homes and added it was logical to keep SMSF borrowing concurrent with that distinction.
“This will align with the government’s own policy settings, where they’ve made a clear distinction in their housing policy between new homes, which do add to the stock of property and the supply of houses in this country, and existing homes,” Burgess said.
“So, there is no question that this ban on residential property will have an impact on housing supply.”
Off‑the‑plan seller disputes government figures
Ashley Bramich, director of Colliers Project Marketing, bringing the perspective of a major off‑the‑plan sales business, questioned whether data recently touted by the government fully captured SMSFs’ involvement in presales.
“We are the largest seller of off-the-plan property in Australia. We are not here necessarily to challenge Treasury’s estimate of 4,000. We anecdotally have figures that are significantly higher than that. I’m sure that will come out in due course,” he said.
Bramich’s comments directly contrast with government statements that SMSF borrowing represents only a small fraction of overall residential lending.
Senate Leader Penny Wong told Parliament last week that SMSF loans accounted for “a very small number” of arrangements each year.
“Only about 4,000 new self-managed super fund borrowing arrangements occur each year on average,” she said.
Treasury officials backed that line, citing Australian Taxation Office (ATO) data that showed 4,300 new LRBAs in 2024 and about 4,000 annually over the previous eight years.
Housing peak bodies say SMSF resi ban represents major supply risk
Three housing peak bodies that took part in the gathering – the Housing Industry Association (HIA), the Urban Development Institute of Australia (UDIA) and the Property Council of Australia issued a joint statement following the roundtable, warning that the SMSF changes would “significantly reduce housing supply.”
To reiterate the impact of the ban, the statement pointed to new industry data that showed SMSFs acquired almost 14,000 residential properties in 2024–25 and a further 11,000 last year - far above the 4,000‑a‑year borrowing figure cited by the federal government.
The associations called for detailed consultation on the SMSF changes to avoid “unintended and unworkable outcomes”, for a review of the combined effect of tax and superannuation reforms “with a view to further fixes if the downside exceeds Treasury modelling”, and for SMSFs to retain the ability to invest in new residential housing.
UDIA national president Oscar Stanley said extensive engagement with developers, financiers, mortgage brokers, commercial finance specialists and property professionals across Australia had delivered a consistent warning: removing SMSF investment out of the new‑dwelling segment would make it more difficult to secure finance for residential projects.
“The housing industry has spoken with one voice today,” Stanley said.
“This policy will make it harder to fund new housing and will ultimately reduce supply.”
Following passage through both houses of Parliament last week and the formal granting of royal assent, the SMSF LRBA ban is scheduled to take effect from 10 August 2026.
[Related: Lenders unite to condemn SMSF resi borrowing ban]
Want to see more stories from trusted news sources?
Make The Adviser a preferred news source on Google.
Click here to add The Adviser as a preferred news source.
