SMSF Lending Ban: What Investors Need to Do Before August

New laws taking effect around 10 August will close SMSF residential lending — but commercial borrowing and grandfathered arrangements may still be available.

Self-managed super fund (SMSF) trustees with residential property loans are facing a hard deadline. New legislation banning residential lending and limited recourse borrowing arrangements (LRBAs) for SMSFs is set to take effect from approximately 10 August 2026 — 45 days after the bill receives royal assent. The Finance Brokers Association of Australia (FBAA) says the clock is already ticking, and brokers must act immediately to contact affected clients.

What the New Law Actually Does

Under the incoming rules, SMSFs will no longer be able to take out new residential property loans or establish new LRBAs from around 10 August. [Australian Broker](https://www.brokernews.com.au/news/breaking-news/fbaa-urges-brokers-to-act-fast-ahead-of-smsf-lending-shakeup-289611.aspx) reports that FBAA CEO Leo Gagic described this as a "new world" for SMSF lending, warning the industry had moved into a "fundamentally different landscape."

Gagic said the legislation was "rushed through parliament with no industry consultation," and the FBAA had cautioned against the reforms before they passed. "There is already confusion and distress," he said, warning there is "a strong likelihood that both homeowners and renters will incur losses and higher prices as a result of legislation that won't help solve the housing crisis in any meaningful way."

The scale of the affected market is relatively contained by volume. Treasurer Jim Chalmers has put the numbers on the record: SMSFs currently account for less than 1 per cent of residential property borrowing overall, and under 0.5 per cent of new lending annually. He has estimated the ban will add roughly $50 million to the federal budget bottom line. The new rules form part of a broader package alongside the negative gearing and capital gains tax changes legislated earlier this year.

What Is Still Available — and What to Do Now

Not every pathway is closing. Two important options remain open.

**Commercial property lending through SMSFs is completely unaffected.** SMSF trustees who hold or are considering commercial property — including business real property — can still borrow within their fund. For business owners who have long considered buying their own commercial premises through super, this option remains intact and worth exploring before broader market conditions shift further.

**Existing residential LRBAs may be eligible for grandfathering.** Australian Broker reports that residential refinancing may still be possible under grandfathering provisions for existing arrangements. Specialist lenders are already engaging with brokers to help affected clients navigate the transition. If you currently hold residential property inside your SMSF, the urgent question is whether your existing loan qualifies — and what your restructuring options look like before the cut-off.

Gagic emphasised that brokers are central to what comes next. "Finance and mortgage brokers will be at the forefront of helping borrowers through these changes," he said. "Impacted clients will rely on the trusted assistance and guidance offered by brokers more than ever before."

Steps to Take Before 10 August

**Check your existing SMSF residential loan.** If you have a residential LRBA, establish urgently whether it is eligible for grandfathering and what your refinancing options look like. The precise cut-off date could still shift slightly depending on when the bill formally receives assent, which makes acting sooner rather than later the sensible approach.

**Assess your commercial property strategy.** If you have been weighing up purchasing business real property through your SMSF, the lending pathway remains open. Our [investor home loans hub](/home-loans/investor) can help you compare financing options for property investment inside and outside of super.

**Model your overall position.** With residential SMSF lending ending and house prices under broader pressure following the CGT and negative gearing changes, now is a good time to stress-test your investment strategy. Our [borrowing power calculator](/calculators/borrowing-power) can help you understand what your servicing capacity looks like at current interest rate settings.

**Consider restructuring outside super.** For some investors, the removal of SMSF residential lending may bring forward a decision to hold property in personal names or a different structure. Before making that call, [compare your refinancing options](/home-loans/refinance) and understand the tax and lending implications of each approach. Our [cheapest home loans comparison](/home-loans/cheapest) shows what rates are available for non-SMSF investment lending right now.

**Speak to a specialist broker.** SMSF lending has always required specialist knowledge, and the new rules make expert guidance more important than ever. Gagic notes that specialist lenders are already engaged and working to support brokers navigating this transition. A broker with SMSF lending experience can clarify which lenders remain active in the space, what grandfathering looks like in practice, and how to structure your next move within the rules that remain.

The FBAA's message is unambiguous: the time to act is now, before the August cut-off removes options that are currently still available.