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{{propApi.successMessage}} {{region}} Change locationHousing industry urges Government to keep SMSF finance flowing to new homes
Housing industry urges Government to keep SMSF finance flowing to new homes
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From this week, SMSFs can no longer enter into new Limited Recourse Borrowing Arrangements (LRBAs) to finance residential property.
Industry data indicates that SMSF borrowing directly financed the construction of thousands of new detached homes each year and facilitated an even larger volume of apartment commencements. These new homes provide a pathway to homeownership and support the rental market.
With a third of Australians renting and cost of living pressures particularly for those Australians that do not own their home and thus experiencing housing insecurity, this ban does not just adversely impact housing supply at aggregate, it impacts intergenerational fairness and financial wellbeing of working Australians.
The housing and finance industry is urging the Government, at a minimum, to permit SMSF borrowing for newly constructed homes while Treasury undertakes and publishes a comprehensive assessment of the impact of the ban on detached home commencements, apartment construction, project pre-sales, rental supply and progress towards the Government's 1.2 million homes target.
Restricting investment in established homes still adversely affects new housing supply. But restricting finance for a home that has not yet been built means the policy reaches directly into the new-home market and contradicts the Government’s own tax reforms designed to encourage new housing.
At a time when Australia is already struggling to build enough homes, there should be a clear and public justification for any policy expected to reduce the building of new homes.
The review should also demonstrate a clear net public benefit sufficient to justify restricting Australians from using SMSF borrowing to build new homes.
If the evidence demonstrates a clear net public benefit from extending the prohibition to newly constructed homes, the Government can make that case publicly. Until then, SMSFs should, as a minimum, not be banned from borrowing for residential property and be allowed to continue to borrow to build new homes.
Australia should not sacrifice additional housing supply before the Government has demonstrated that a clear public benefit from doing so.
A Joint statement from:
Australian Finance Industry Association
Housing Industry Association
Property Council of Australia
Real Estate Institute of Australia
Self Managed Super Fund Association
Urban Development Institute of Australia.
For more information please contact:
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