Burgess was invited to a roundtable discussion at Parliament House hosted by Shadow Minister for Housing and Homelessness, Andrew Bragg, to talk about the Government’s changes to the borrowing rules for SMSFs and the impact they will have on the housing sector and housing supply.
The discussion provided an opportunity for industry participants and stakeholders to share their first-hand and industry perspectives on the proposed changes and their likely implications for housing investment and supply.
Burgess said there is a strong argument that a targeted LRBA carve-out for new residential premises would align with the Government’s stated rationale for exempting new builds from the broader negative gearing and CGT changes.
“The Government’s own housing policy distinguishes between investor demand for existing homes and investment in new homes which increases housing supply,” he said.
“We are also concerned the changes to the LRBA rules will make the remaining residential SMSF lending market even thinner, increasing settlement and refinance risk for grandfathered trustees as lenders may look to exit the residential LRBA market.”
He continued that a trustee who signs a valid off-the-plan contract before 10 August 2026 may settle 12-24 months later and still need an SMSF residential LRBA product at settlement and if lenders withdraw products or approvals lapse, the transitional protection is of little practical use.
“We also have concerns that this is not a clean residential property ban. The legislation makes future SMSF real property borrowing turn on the business real property definition in the SIS Act which is a complex technical test, never designed to operate as the gateway for all SMSF property borrowing,” Burgess said.
“The result is a series of unintended consequences: some residential property may remain eligible, while some commercial, rural and small-business premises may be excluded. This is not sound housing policy; it is rushed law creating uncertainty for trustees, advisers, lenders and small businesses.”
Furthermore, Burgess said, regional Australia does not always divide neatly between business premises and residential accommodation.
“Doctors, pharmacists, vets, motels and roadhouses may operate from mixed-use premises where accommodation is necessary to deliver essential services,” he said.
“The concern is not that every one of these arrangements will fail. The concern is that they now become threshold LRBA eligibility questions, and many lenders may simply decline arrangements that appear too complex or uncertain.”
Industry estimates suggest SMSF buyers represent a meaningful share of off-the-plan pre-sales needed to unlock construction finance.
“Reducing this source of demand risks slowing housing supply at a time when Australia needs more homes, not fewer,” Burgess said.
“This could delay projects, reduce the number of developments that proceed and ultimately slow the delivery of new housing.”
