The SMSF borrowing ban: What brokers need to be discussing with clients now

Deals already in flight

For brokers managing active transactions, timing has become critical.

The legislation provides transitional protection in a number of scenarios, including where borrowing arrangements are already in place, where loans are being refinanced, and where purchase contracts have been signed ahead of commencement, even if settlement happens later.

With the start date now locked in as 10 August 2026, the focus for brokers is straightforward but urgent: ensuring contracts are signed and exchanged in time and that each deal is clearly captured within the transitional provisions. For those clients already partway through a transaction, clarity and speed will be key.

A narrowing window for new residential deals

For clients who have been considering entering the market, the timeline is now compressed.

Any new residential LRBA will need to be contracted prior to 10 August 2026. Beyond that point, the expectation is that the opportunity closes entirely, with no indication of a reopening.

From a broker perspective, this creates a near-term surge in urgency. Pipelines that may have been progressing at a measured pace are now being brought forward, while lender turnaround times and operational capacity will come under increasing pressure as the deadline approaches.

Refinancing remains – but the detail matters

One area that remains unchanged, at least in principle, is refinancing.

Existing SMSF property loans are effectively grandfathered, and refinancing arrangements are carved out from the reforms. However, the practical application of this will be important and, in many cases, still evolving.

Brokers will need to stay close to lenders to understand how policy settings are applied in practice, whether refinanced facilities need to mirror existing terms, what documentation will be required, and how more complex scenarios are treated.

It is also worth keeping in mind that the longstanding constraints around equity release remain in place. Any increase in loan size will need to align with a permitted purpose under the SIS framework, rather than being used simply to access additional funds.

Commercial property comes into sharper focus

While much of the attention has been on what is being removed, SMSF borrowing itself is not being eliminated.

The legislation narrows the borrowing exception so that it continues to apply to business real property, leaving commercial property strategies intact. As a result, there is likely to be a shift in the nature of conversations brokers are having with clients, particularly business owners.

For some clients, this may mean revisiting the idea of purchasing business premises through super. For others, it may prompt a broader rethink of asset allocation within the fund. Either way, commercial property is set to become a more prominent part of the SMSF lending discussion.

The role brokers will play next

This represents one of the most significant shifts to SMSF borrowing since the LRBA framework was introduced.

While the headline change centres on residential property, the real impact will be felt in how brokers navigate the next phase, managing time-sensitive decisions, interpreting lender responses, and helping clients understand where they stand under the new rules.

Over the coming weeks, clear communication and careful structuring will be essential. Clients will be looking for certainty in a changing environment, and brokers will play a central role in guiding them through what remains possible, what is time-critical, and what comes next.

Them Lam is chief distribution and marketing officer (CDMO) at Australian Finance Group (AFG).

Lam has more than 25 years’ experience in financial services, including 17 years at AFG.