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Following the Albanese government’s surprise last-minute concession to the Greens last week, future limited recourse borrowing arrangements (LRBAs) for residential property through self-managed super funds have been banned, but not before a 45-day transition period following royal assent.
With the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 receiving royal assent on 26 June, the ban will likely take effect on 10 August.
Race against the clock
With the transition period now underway, brokers have reported a surge in last-minute inquiries from both existing SMSF trustees and prospective clients.
Speaking on Broker Daily Uncut, Finni broker Eva Loisance said inquiries had spiked almost immediately following the announcement, with many borrowers now attempting to complete transactions that had been sitting on the sidelines for months or even years.
“It’s been really busy,” Loisance said.
“People are freaking out.
“I’ve had clients looking to buy an SMSF for a couple of years. Never really did anything. All of a sudden they want to do it in 40 days.
“We have had so many calls in the last few days.”
Lenders brace for a final wave
Lenders have also reported an increase in applications since the ban was announced, with many urging brokers to rapidly triage residential SMSF files that are already in flight.
AMP – which only re-entered the SMSF lending arena this year – initially retreated from the SMSF lending space following the changes but “reviewed its position”, saying it would reopen SMSF loans for the time being.
Similarly, Pepper Money’s head of broker sales, Siobhan Williams, said the non-bank had experienced a surge in demand.
“We certainly have seen a surge of inquiry since it was announced,” she said and spoke on The Adviser’s Navigating commercial finance webcast.
Looking beyond the transition period, Williams said: “What will happen post the changes is we will still be open for business for refinances. So refinances will still absolutely be an opportunity for cash flow improvement within the SMSF.
“As for whether or not we’ll see a spike in commercial property acquisition through SMSF, yields are still pretty strong and there are still a lot of tax benefits to purchase for owner occupation as a business.
“So we may see some self-employed who already have SMSFs that are switching from RESI over to commercial as a strategy, if that’s the advice that they’re given.”
Risks of the rush
Loisance said that many borrowers were underestimating the difficulty of completing an SMSF purchase before the deadline.
“The issue in this short space of time is deciding whether this avenue is best for them without really having had a conversation with a financial planner,” she said.
Fellow Finni broker Costa Arvanitopoulos said many prospective borrowers were starting from scratch, leaving very little time to establish an SMSF, organise their finances, and secure a property before the ban takes effect.
“I had a client yesterday who contacted me, who wants to do an SMSF, doesn’t have it set up, nothing – like bare bones,” Arvanitopoulos said.
“I said to him, ’I can go quick, but you’re going to have to go 10 times quicker than me, because you need to set the SMSF up, you need to then get your accounts in order and then you need to go get your buyer’s agent and then you need to sign the contract.’
“You need to be running.”
The rush has also raised concerns that some borrowers could feel pressured into making investment decisions to beat the deadline.
Prior to the announcement of the ban, the Financial Advice Association of Australia said that a rush into SMSFs could create opportunities for “unscrupulous property spruikers and operators”, as well as borrowers entering the market without fully understanding the risks or compliance requirements.
Loisance said that concern was coming to fruition.
“This is my concern, that people are going to be buying whatever property they’re put in front of them because it’s like, ’Well, this is the chance,’” she said.
That pressure could also be compounded by lender turnaround times, with Loisance saying the influx of applications is likely to stretch service levels across the market.
[Related: Westpac forecasts slump in investor activity following budget]
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