If you’ve been considering using your Self-Managed Super Fund (SMSF) to borrow for residential property, the window to do so is closing — and it’s closing faster than most people realise.
In a deal struck to secure Greens support for its broader budget tax package, the Albanese Government has agreed to ban new Limited Recourse Borrowing Arrangements (LRBAs) for residential property. This is the borrowing structure that has allowed SMSF trustees to gear into property for nearly two decades. Once the legislation receives royal assent, a 45-day transition window applies — after that, no new SMSF residential property loans can be entered into.
What’s Actually Changing
Treasurer Jim Chalmers confirmed the change on 23 June 2026, framing it as a move to “strengthen the rules that limit borrowing by superannuation funds.” The mechanics are straightforward:
- Existing arrangements are exempt. If you already have an LRBA in place, nothing changes for you.
- Contracts signed before commencement are protected. The contract date — not the settlement date — is what matters.
- A 45-day window applies after royal assent for deals already underway, but the bill is expected to pass the Senate before parliament rises on 2 July 2026, with royal assent following soon after. That puts the realistic cut-off for new deals somewhere around mid-August 2026 — and likely sooner in practice, for reasons explained below.
Why “45 Days” Doesn’t Mean You Have 45 Days
Here’s the part that matters most for anyone currently weighing up an SMSF purchase: the legal grandfathering period is not the same as the practical window you actually have.
When a similar policy was floated by Bill Shorten in 2019, all four major banks withdrew their SMSF lending products entirely — well before any ban actually took effect. Lenders don’t wait around for legislation to bite; they reprice risk and pull products the moment the writing is on the wall.
With non-bank lenders like Bluestone, Pepper Money and Resimac now dominating this space — alongside AMP Bank, which only just re-entered SMSF lending after an eight-year absence — there’s a real risk that loan products start disappearing well before the formal ban date. If you’re mid-process, the safer deadline to work toward is Senate passage of the bill, not the 45-day grace period that follows royal assent.
The practical advice circulating among SMSF specialists right now is blunt: exchange contracts as soon as possible, and don’t wait for the ban date to bite.
A Lot of People Are Not Happy About This
It’s fair to say this announcement has not landed well — and the criticism is coming from almost every direction.
It’s a reversal. As recently as May 2025, Labor explicitly said it had “no intention” of banning LRBAs, when the Greens demanded exactly this in exchange for supporting the Division 296 super tax changes. A little over a year later, the same demand has been accepted.
The Coalition has gone in hard. Shadow Treasurer Tim Wilson described the budget as being “in complete disarray,” arguing that “Jim Chalmers no longer knows what’s in his budget. The Greens are dictating the terms.” He went further, calling the SMSF changes “a direct assault on Australian retirees” and accusing the Government of having “declared war on small businesses and self-managed superannuants.”
The SMSF industry says the data doesn’t support it. SMSF Association CEO Peter Burgess pointed out that LRBAs have been reviewed multiple times — including twice by the Council of Financial Regulators — without any finding of systemic risk. His view: “Review after review has found LRBAs pose no material risk to the superannuation system.”
Investor advocates say it closes off a legitimate option. PIPA chair Cate Bakos noted that SMSF residential borrowing represents only around 1% of the overall residential market, calling it “a strange demand from the Greens to secure their support for the reforms” — particularly given Chalmers had previously been “emphatic” that SMSF lending arrangements would remain unchanged.
Buyer’s agents are questioning the logic. REBAA’s Zoran Solano echoed the view that SMSF borrowers are too small a cohort to meaningfully move the needle on housing affordability, while raising concerns that more detail of the Greens-Labor deal may still emerge beyond what’s been publicly disclosed.
Even the numbers undercut the stated rationale. SMSFs account for less than 1% of total residential property borrowing and less than half a percent of new residential borrowing each year. The change is forecast to raise around $50 million over four years — a rounding error against the broader tax package, and not enough, critics argue, to justify removing a borrowing structure that’s been in place since 2007.
What the Government Says
For its part, the Government insists the changes are limited in scope. The Prime Minister’s office has stressed that the changes “don’t in any way change the tax arrangements for superannuation, don’t impact any existing SMSF borrowing arrangements and provide time to finalise arrangements that are in train.” The Greens, meanwhile, argue the move will “take a little bit more heat out of the housing market by reducing demand,” preventing SMSF buyers from outbidding renters and first-home buyers at auction.
Whichever side of that argument you land on, the practical reality for anyone currently considering an SMSF property purchase doesn’t change: this option is being closed off, and the runway is short.
The Bottom Line
If an SMSF property purchase is on your radar — or you have clients who’ve been weighing one up — this is not a “wait and see” situation. Between the prospect of lenders pulling products early and the legislation moving quickly through the Senate, the practical deadline is likely weeks away, not months.
If you’re serious about it, the priority now is simple: get pre-approval sorted, get the structure right, and get contracts exchanged — before the window closes rather than after.
This article is general commentary on a developing policy area and does not constitute financial, tax, or legal advice. Speak to your SMSF specialist, broker, or adviser about your specific circumstances before acting.
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