Calls for ‘small’ change as self-managed superannuation ban starts today: ‘Drive up rents’
The housing industry says SMSF investment currently supports the delivery of more than 16,000 rental homes a year in Australia.
The housing industry is urging the Labor government to make a “straightforward” change to its new ban on borrowing within superannuation as the transition period leading up to the ban ends today.
A previous arrangement that allowed everyday workers to borrow to buy an investment property by using the money in their Self-Managed Super Fund (SMSF) has now been phased out as part of the government’s broader changes to negative gearing and capital gains tax.
But the building industry continues to warn the disappearance of that pool of funding will stall projects and push up rents, directly impacting about 16,000 rental homes supported
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The Property Council of Australia and the Urban Development Institute of Australia (UDIA), along with the SMSF Association say the change will have ongoing consequences for housing supply.
The industry has reported a mad dash of activity as the window to use the SMSF rule closed.
The chief executive of ASX-listed Australian Finance Group, which provides technical support for brokers and lenders, told The Australian Financial Review the number of limited recourse borrowing arrangements (LRBA) within SMSFs had doubled since the ban was announced in late June as investors tried to beat the change.
UDIA National President, Oscar Stanley, noted a surge in last-minute applications before the ban comes into effect, hoping it won’t actually be the last gasp for build to rent projects.
“The reality is that once the transition period ends, the pipeline of new SMSF LRBA rental housing will cease and this will impact thousands more houses in projects that rely on SMSF investment for pre-sales,” he said.
The industry bodies are calling on the government to consider a carve out to allow individual superannuation funds to still invest in new long-term rental housing.
Stanley called it a “straightforward approach that would ensure the delivery of thousands of additional new rental homes each year while maintaining the government’s broader policy intent”.
The ban was pushed through at the behest of the Greens over fears investors would simply flock to SMSFs because the super sector retained the more generous CGT treatment as the government ends the 50 per cent discount for investors.
Matthew Kandelaars, from the Property Council of Australia, warned renters will feel the effects of the removal of SMSF buyers from the market.
