Government’s SMSF Lending Changes Impact Future Investors

Today, the Federal Government has announced that they will include a ban on Limited Recourse Borrowing Arrangements (LRBA’s) within Self Managed Super Funds (SMSF’s) for residential investment property acquisitions.[1]

Under current legislation, SMSF’s can use LRBA’s to acquire property through a loan. This proposal would put an end to SMSF borrowers being able to use an LRBA to borrow for residential investment.

What Does This Mean for Existing SMSF Investors? 

Firstly, the good news. The proposed changes are for new SMSF Lending only, meaning that existing Limited Recourse Borrowing Arrangements will continue to be respected. However, this if this passes as currently understood, it could severely limit or remove opportunity to explore other SMSF loan options, meaning SMSF borrowers could not refinance or restructure to more competitive loan options.

If you currently have a residential investment loan through an SMSF, there’s no current change to your situation. However, if you choose to invest in future residential property, you likely won’t be able to do so through an LRBA.

What Does This Mean for New SMSF Investors? 

Under the proposed legislation, New SMSF borrowers may lose the ability to purchase residential investment property using borrowed funds. The change will likely take place 45 days after the budget bill is approved, which is currently slated for the end of this week. [2] If approved and receives Royal Assent, this means that the ban will be active from around August 2026. However, any agreements entered via LRBA prior to that date will currently not be impacted. This is still subject to change.

Those with plans in place to buy an investment property through their SMSF have limited time to finalise, so coordinating with your SMSF adviser, accountant and any other involved professionals is crucial.

Additionally, while Residential investing through an SMSF may been greatly affected, Commercial lending would be unaffected (as of 23/6/2026). Investing in residential property would still technically be possible, however any investment purchases would have to be made outright, without borrowing funds.

Remember, this would only be the removal of one pathway to property investment. Property investment done outside of an SMSF is unaffected. Investors may still have other options, including investing outside an SMSF or considering commercial property strategies where appropriate. Professional advice will be important before making any decision.

How Could This Impact the Property Market? 

While it is still too early to predict the full impact of these proposed changes, they may lead to a shift in how some investors approach residential property.

If no SMSF investors are able to use borrowed funds to purchase residential investment properties, this could reduce competition in some parts of the market and create more opportunity for home buyers. Because many SMSF property purchases are investment properties, rental supply will be an important area to watch. Any impact on rents will depend on how investors, buyers, and the broader market respond over time.

What to Do if This Impacts You?

With this news only just breaking, it’s understandable to want to take action immediately, however, make sure you’re making informed, educated decisions, especially when it comes to property investment. The current proposed changes are legislation only and not yet passed.

Stay Informed

As we find out more, We’ll be sharing with clients to ensure you’re making informed, educated, confident decisions. Be sure to follow MoneyQuest Australia and your local MoneyQuest broker on social media for updates.

Reach out to Experts 

Discuss with your Financial Adviser, Accountant and, of course your MoneyQuest broker, to see what this means for you, and what you can do. We can help you explore other potentially beneficial investment lending strategies, and help you work towards your finance and wealth building goals.

Final Points

Property investment is rarely straightforward. Markets shift, prices flux and opportunities appear and disappear. What doesn’t change is the ability and resilience of investors to change to meet the market. Having a good team on hand to support you in your investment goals is key, which is where we come in. We can help you explore alternative investment solutions, find potential opportunity and make smart, sustainable finance solutions. Reach out to us today.

[1] Tchetchenian, C. (2026). Government agrees to ban future LRBA for resi. [online] Theadviser.com.au. Available at: https://www.theadviser.com.au/broker/48586-government-agrees-to-ban-future-lrba-for-resi [Accessed 24 Jun. 2026].

[2] Bowes, M. (2026). Limited recourse borrowing arrangements explained: What Labor-Greens’ new ban on SMSF residential property investment means for you. [online] Australian Financial Review. Available at: https://www.afr.com/wealth/personal-finance/smsf-property-plans-shattered-by-labor-greens-budget-deal-20260623-p6099k [Accessed 24 Jun. 2026].

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