Speaking at a media briefing hosted by the Association of Superannuation Funds of Australia, Tria Investment Partner’s managing director Andrew Baker said the aggressive selling of property combined with gearing is cyclical in Australia.
“It goes to the biggest pot of money around, and this time it’s SMSFs. It always ends in tears, guaranteed, every time, with colossal losses,” Mr Baker said. “We already see that, it’s just coming in $10m lots instead of $100m.”
Mr Baker suggested looking to the UK’s SIPP scheme to “fix” the issue.
“The UK’s SIPP structure has got this pretty right. There’s a ban on residential property, there’s a ban on personal use assets,” he said. “[It’s] very easy to do, if you did the same thing here, you would knock out 90 per cent of the problems we have.”
However, Andrew Bloore, chief executive of SMSF administration business Super IQ, suggested some of the current changes in the superannuation industry are working towards creating higher standards for those involved in the SMSF sector.
Mr Bloore noted that auditors are now required to be registered and that SMSF trustees are now subject to the ATO’s new penalty regime.
“That’s a fundamental [way] of improving the way that things operate to a standard. And provided we can get them operating to a standard, then the industry will thrive, the way it should thrive, for the right people. And remove people [from] the industry that we shouldn’t have,” Mr Bloore said.
Can someone please explain to me what the issue is with residential property? Because I really don’t get it. I have clients with both residential and commercial property and it’s the ones with commercial property that have the issues. Long vacancies, inability to sell, non-paying tenants, significant repairs – all issues for my commercial property owning clients. None of my residential property owners have had these issues. I realise they could happen but it seems to me that a residential property owner can more easily replace tenants and have a larger market of potential buyers when it comes time to sell. So what is the problem?