Borrowing to Buy Property in Your Super Just Got Banned. Here's The Tea…
Every so often the government quietly ends a wealth strategy, and most people don't hear about it until it's gone.
This is one of those moments.
In June, as part of its deal with the Greens to get the budget tax package through the Senate, the Labor government banned self-managed super funds from taking out new loans to buy residential property. Not phased out. Not reviewed. Banned! with a hard deadline of 10 August 2026.
I've spent my career on both sides of this: inside the banks, and now as a broker and investor with my own portfolio. So let me break down what this change actually is, who it affects, and whether you should care.
The strategy thats about to end:
Here's how it worked.
Since 2007, an SMSF could borrow money from a lender to buy property through a structure called a limited recourse borrowing arrangement aka an LRBA. Your super fund put up the deposit, and a lender covered the rest, and the property sat in a holding trust until the loan was paid off. If the loan went bad, the lender could only take that property and the rest of your super was protected.
So, in plain English: it basically let you own a leveraged investment property inside the lowest-taxed structure in Australia.
Sounds great, right? Which is exactly why regulators never loved it. Treasury's Murray Inquiry recommended shutting it down back in 2014. It survived twelve more years , until it became a bargaining chip in this year's budget negotiations (2026).
So, what's actually changing (and what isn't)?
The headline: new residential LRBAs are gone from 10 August 2026.
If your SMSF already owns a property with a loan against it, you're totally fine. Existing arrangements are grandfathered. Nobody is forcing you to sell, and refinancing is still allowed, though I'd expect fewer lenders to hang around in this space, so keep an eye on your interest rate.
If your SMSF has the cash to buy a property outright, that's still allowed. The ban is on borrowing, not owning.
And if you're a business owner, your fund can still borrow to buy commercial property — the premises your business runs from, for example. That door stays open, and honestly, I think it's where SMSF lending is going to shift next.
What's ending is one very specific thing: borrowing inside super to buy a house or unit. That's it. But for the people who were planning exactly that, it's everything.
But wait, don’t panic!
To use the old rules, your fund needs to have exchanged contracts by 9 August 2026. Fund set up, holding trust in place, finance approved, contract signed.
I've watched what deadlines do to people. In my banking years and in my broking years, the pattern is the same: a closing window makes average deals look urgent and bad deals look brilliant.
Setting up an SMSF property purchase properly can take weeks if not months. Doing it in weeks while every lender, lawyer and accountant in the country is buried in the same rush — is how you end up locked into a structure that never suited you. And super is not the place to find that out.
If this strategy was already underway for you, with advice behind it, then yes move quickly and get it over the line.
If you're only hearing about it now because of the deadline? Let it go. This was always a niche option for a specific type of investor with a specific balance and timeline. Missing it is not missing out.
There are more ways to build a property portfolio outside your super than inside it. That's where most of my clients start, and it's the part nobody is banning.
Want to know what your options actually look like? Get in touch and let's look at your numbers.
This article is general information only and doesn't take your objectives, financial situation or needs into account. It is not financial, tax or superannuation advice. Speak to a qualified financial adviser or SMSF specialist before making any decisions about your super, and a licensed mortgage broker before making any borrowing decisions.