SMSF lending ban contradicts the budget it was bolted onto

25 June 2026 (Published in the Australian Financial Review)

In policymaking, the first test should always be simple: does the measure solve the problem it is designed to address?

That is the question the Government must now answer following its move to ban new lending for residential property within self-managed super funds (SMSFs) while grandfathering existing arrangements.

The measure was not in the Budget. It was not consulted on. And it will take effect just 45 days after the legislation is passed.

The stated objective is housing affordability. That is a serious national priority. Australia needs more homes and a policy framework that helps all Australians, particularly younger Australians, into secure housing.

But this ill-considered ban undercuts that very goal, working against efforts to increase housing supply and housing affordability. At the same time, it has created real uncertainty for working Australians planning for retirement, lenders supporting competition, innovation and access to the home lending market, and the broader credit markets that fund investment across the economy.

Let’s start with the evidence, because the numbers tell a story at odds with the rhetoric.

The latest data shows that SMSFs hold around $75 billion in assets supported by limited recourse borrowing arrangements (LRBAs), backed by $28.9 billion in debt. That’s in a housing market valued at just under $13 trillion.

By the Government’s own reckoning, LRBAs account for less than 1 per cent of total residential property lending and less than half a per cent of new lending each year.

If the policy target is housing demand, the scale of intervention should be matched to the scale of the problem.

This is a small, specialised and well-understood market. It already operates inside a strong regulatory framework, with super trustee duties, superannuation balance constraints and structural safeguards that limit speculative investment, and which have been examined and reviewed repeatedly.

A blanket ban is a blunt instrument for a problem this size.

Australia’s housing problem is fundamentally a supply problem. It will not be solved by narrowing retirement savings choices for people who have chosen to take responsibility for their own superannuation savings and retirement planning. It will be solved by building more homes, encouraging investment, improving planning systems, and creating stable policy settings that support confidence.

This is where the policy contradiction becomes difficult to ignore.

At the same time the Government is seeking more housing supply and stronger retirement outcomes, this measure removes a pathway some Australians use to diversify their retirement savings into residential property.

Read the full opinion piece in the Australian Financial Review.