Australia bans SMSF loans for residential property purchases

The Australian federal government announced on 23 June 2026 that self‑managed superannuation funds (SMSFs) will no longer be permitted to borrow money to invest in residential property. SMSFs will have a 45‑day period after the legislation takes effect to finalise any existing purchase contracts or limited‑recourse borrowing arrangements (LRBAs); contracts signed within that window are unaffected. After the deadline, SMSFs may still buy residential property outright with cash, and existing LRBAs can be refinanced under current rules, but new borrowing for residential purchases is prohibited. The change applies only to residential property and does not affect SMSF investments in commercial or industrial real estate.

Fund trustees are advised to review their SMSF deed and investment strategy, ensuring any borrowing provisions are clearly documented. With the new restriction, many investors are considering alternatives such as listed real‑estate investment trusts (REITs), Australian shares with strong dividend yields, and listed investment companies (LICs) to maintain income generation within an SMSF. Existing SMSF loan products typically offered up to 70‑80% leverage and term lengths of up to 30 years, but these options will cease for new residential purchases after the rule change.