Australia bans SMSF borrowing for residential property

The May 2026 federal budget introduced a legislative change that, from 10 August 2026, prohibits self‑managed super funds (SMSFs) from borrowing to acquire residential real estate. Under the new rule, SMSFs may only borrow for property classified as “business real property,” meaning it must be used wholly and exclusively for a business. Existing borrowing arrangements are exempt but are subject to strict carve‑out conditions and cutoff dates.

CPA Australia has warned that the ban does not tackle the primary source of consumer harm, which it says stems from unregulated lead generators and high‑pressure sales tactics that steer SMSF investors toward limited recourse borrowing arrangements (LRBAs). The body urges that anyone influencing financial decisions be brought under the financial services licensing regime to protect investors and ensure system fairness.