New laws restrict SMSF borrowing. Here’s what it means for investors.
For almost two decades, many Australians have purchased residential property through their Self Managed Super Fund (SMSF) using a Limited Recourse Borrowing Arrangement (LRBA).
That option is now closing.
Recent changes to legislation mean the opportunity to purchase residential property through an SMSF using borrowed funds is coming to an end for new investments. While existing arrangements remain protected, investors considering this strategy now have a limited window to act.
What has changed?
On 23 June, the Federal Government confirmed an agreement with the Greens to prohibit new residential property purchases using an LRBA within an SMSF.
The legislation moved quickly through Parliament and received Royal Assent on 26 June. A 45-day transition period now applies, placing commencement around 10 to mid-August.
That means the opportunity to use borrowing for residential SMSF property purchases is confirmed, but the timeframe is short.
Importantly:
- Existing residential LRBAs are grandfathered and will not be affected.
- The changes apply only to residential property borrowing.
- Commercial property borrowing through an SMSF remains unchanged.
The deadline is closer than many investors realise
Many investors assume they have until the legislation commences before making a decision. In reality, the practical deadline is much earlier.
Establishing an SMSF, obtaining finance approval, selecting a property, meeting lender requirements, exchanging contracts and completing legal documentation all take time.
Most importantly, it is the contract exchange date, not settlement, that determines whether a purchase qualifies under the current rules. Contracts must be signed before the new legislation takes effect.
Investors who prepare early are the ones most likely to preserve their borrowing options.
The opportunity hasn’t disappeared
While borrowing for new residential SMSF purchases is ending, investing in residential property through an SMSF is not.
SMSFs can still purchase residential property using available cash.
For investors with sufficient funds, or those planning ahead, this remains a strong long-term investment strategy without relying on borrowing.
Why RP Prospects is well positioned
At RP Prospects, our investment model has always focused on planning rather than speculation.
Our single fixed price contract allows investors to secure today’s purchase price while settling only when construction is complete.
This gives SMSFs additional time to accumulate contributions, receive rental income from existing assets or reallocate investments before settlement.
Key benefits include:
- Lock in today’s purchase price.
- No construction progress payments.
- More time for your SMSF to build available cash before settlement.
- No reliance on residential SMSF borrowing rules for cash purchasers.
Rather than rushing to meet changing legislation, investors can secure a quality residential property today while allowing their fund time to prepare.
Why advisers are acting now
These legislative changes represent one of the most significant shifts in SMSF property investing in years.
As a result, accountants, financial advisers and mortgage brokers are already discussing alternative strategies with their clients.
Whether clients are seeking to complete a purchase before the transition period ends or invest using cash through our fixed price model, understanding the available options now is essential.
RP Prospects works alongside advisers from initial strategy through to settlement, ensuring clients receive professional guidance throughout the process.
Partner with RP Prospects
When you refer a client to RP Prospects, you’re partnering with a team that values both your client relationships and your professional reputation.
We manage the entire acquisition process, provide regular updates, and deliver a seamless experience from enquiry through to settlement.
We also believe referral partners should be rewarded promptly. Once contracts become unconditional, referral commissions are paid within 14 days, providing reliable cash flow rather than waiting until settlement years later.
As the transition period continues, many SMSF investors will be seeking advice about their next steps. Now is the ideal time to begin those conversations.
Speak with our team
Contact the RP Prospects team today to discuss your clients’ options and discover how we can help them continue building wealth through residential property, whatever the future holds.
General Information Disclaimer
This publication contains general information only and does not take into account your objectives, financial situation or needs. You should seek independent financial, taxation and legal advice before making any investment decision.