Housing Construction Concerns Grow Following SMSF Residential Borrowing Ban
The Housing Industry Association (HIA) is calling for SMSFs to be allowed to continue borrowing to finance new homes, warning the recent ban could reduce housing construction.
The new rules restrict SMSFs from borrowing to purchase residential property via limited recourse borrowing arrangements (LRBAs).
HIA estimates the restriction could result in around 4,000 to 5,500 fewer detached homes being commenced in a year, at a time when Australia is already falling behind on its housing targets.
HIA is calling on the government to undertake a comprehensive cost-benefit analysis of the restriction, including its impact on:
Detached housing
Apartment construction
Rental supply
Housing affordability
“Until that work is completed, SMSFs should, at a minimum, continue to be permitted to borrow where the investment finances the construction or acquisition of an additional new home,” said Tim Reardon, HIA chief economist.
While residential borrowing is debated, SMSFs can continue to use LRBAs to purchase eligible commercial property, subject to SMSF and lending rules.
Direct Credit Home Loans provides SMSF loans of up to $3 million, with LVRs of up to 80%.
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