Six of Australia's peak property and finance bodies have jointly called on the Federal Government to reverse course on recent restrictions banning self-managed super funds (SMSFs) from borrowing to build residential property, warning the policy risks worsening the country's housing shortfall.
The Australian Finance Industry Association, Housing Industry Association, Property Council of Australia, Real Estate Institute of Australia, Self-managed Super Fund Association, and Urban Development Institute of Australia issued a joint statement this week after SMSFs became unable to enter additional Limited Recourse Borrowing Arrangements to finance residential property. The coalition argues the change should be paused, at minimum for newly built housing, until Treasury independently assesses and publishes the ban's impact on housing supply.
The restriction stems from the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, which received Royal Assent on 26 June, with the LRBA ban commencing 45 days later on 10 August; existing arrangements are grandfathered. Brokers report SMSF investor appetite remains firm, with many clients shifting to commercial property instead. Even so, the coalition argues the change carries real costs for supply.
According to the joint statement, "SMSF borrowing directly financed the construction of thousands of new detached homes each year and facilitated an even larger volume of apartment commencements."
The bodies say those homes had provided pathways to ownership and supported rental supply, and warn the ban's effects extend beyond aggregate housing numbers. They argue it "impacts intergenerational fairness and financial wellbeing of working Australians," pointing to the roughly one-third of the population who rent.
The joint statement draws a distinction between limiting SMSF finance for established homes, which the coalition acknowledges already affects supply indirectly, and blocking finance for properties not yet built. They argue the latter cuts directly into construction activity and "contradicts the government's own tax reforms designed to encourage new housing."
The coalition is calling for a clear, published justification before the restriction proceeds further, stating any such policy "should demonstrate a clear net public benefit sufficient to justify restricting Australians from using SMSF borrowing to build new homes." Absent that evidence, they argue SMSFs should at minimum retain the ability to borrow for construction.
The statement lands as the government pursues its target of 1.2 million homes, with the coalition arguing the ban could work against progress on commencements, apartment pre-sales, and rental supply just as that target comes under pressure.
For brokers advising SMSF trustee clients, additional LRBAs for residential property remain unavailable for funds without an existing arrangement in place, pending any government response to the coalition's call for a review.
Read the joint media release here.
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