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Accountants are calling recent changes to the use of limited recourse borrowing arrangements (LRBAs) disproportionate, saying they will not ease house prices and warning that they will harm SMSF holders, including younger Australians.

The change, aimed at restricting SMSF holders' ability to use LRBAs to purchase residential properties (which had been in place since 2007), has elicited numerous responses within the profession following its 23 June announcement, with support from the Greens. 

"The structure is conservative by design, and there is little tax advantage to remove. The ban will not move house prices or add to supply. What it will do is close off a legitimate asset class for the many SMSF members whose balances are not large enough to buy property outright," said Stuart Sheary, head of technical at the Institute of Financial Professionals Australia.

“This is not unchecked activity — residential property is a legitimate part of a diversified retirement portfolio. Rather than applying targeted, calibrated settings, the Government has chosen a blanket approach. Removing residential SMSF borrowing does not eliminate demand for property investment within superannuation,” added Andrew Chepul, chief executive of ColCap Financial Group.

In a joint statement, industry practitioners, including Chepul, said “if the Government proceeds, a more balanced alternative would be to allow limited recourse borrowing for one residential property within an SMSF”, calling for a more “proportionate and targeted policy”.

“If the Government is determined to act, a more proportionate approach would be to allow borrowing for a single residential property within an SMSF. This would preserve diversification, maintain appropriate guardrails, support trustee choice, and better align with the Government’s stated objectives,” said Mario Rehayem, chief executive of Pepper Money. 

“This policy was introduced without consultation, detailed modelling or evidence of systemic risk. It should be reconsidered before it materially reduces Australians’ capacity to build sustainable retirement savings,” Rehayem said.

With many younger Australians actively engaging with their retirement savings, Bluestone chief executive Mark Jones said the policy risks undermining those taking responsibility for their financial future and destroying pathways to retirement security.

"Superannuation is a long-term investment. It is reasonable for members to take a long-term view and to hold growth assets, including direct property, over that horizon. Direct property has long been a part of that mix," Jones said.

Previously, accountants have warned that these changes would crush trust in the nation’s retirement system, with some echoing the budget refrain of broken promises, others saying that the government is using a genuine vehicle for retirement savings as a bargaining chip, in a policy that is not evidence-based or in the public interest, but highly political.

26 June 2026
Carlos Tse
accountantsdaily.com.au