If your Self-Managed Super Fund (SMSF) uses or is considering using a Limited Recourse Borrowing Arrangement (LRBA) to buy property, an important change takes effect today.

What’s an LRBA? It’s a type of loan a super fund uses to buy a property. If things go wrong and the loan can’t be repaid, the bank can only take back that property, it can’t touch the rest of the fund’s money or investments. This keeps the rest of your retirement savings safe, even if that one property investment doesn’t work out.

What’s An SMSF And How Does Property Fit In?

An SMSF is a super fund you run yourself, rather than having a retail or industry fund manage it. It’s still your retirement savings, still taxed concessionally however you just choose the investments, including property.

An SMSF can buy property outright with fund cash, or borrow via an LRBA, a loan where the lender can only claim that one property, not the fund’s other assets.

You can’t live in it. The property belongs to the fund, not you personally, and exists purely to grow your retirement savings. Residential property must be rented to an unrelated tenant at market rent. Business real property is land/buildings used entirely in a business and is different as your own business can lease it back from the fund at market rent. For example, your SMSF buys your restaurant premises, your business pays rent to the fund instead of a stranger landlord, and that rent builds your retirement savings.

What’s Changing?

As of today, 10 August 2026, new LRBAs used to buy real property can only be used for business real property, not residential. LRBAs themselves aren’t banned, this just narrows what real property they can fund. Other assets (like shares) are unaffected.

Why?

The change is aimed at improving housing affordability, by reducing the number of investors (via SMSFs) competing with everyday home buyers for residential property.

You’re Protected If:

• Your LRBA was already settled before today
• You exchanged a binding contract before 10 August 2026, even if settlement or the LRBA itself happens later
• You refinance an existing LRBA after 10 August, without increasing the debt

What Matters Is The Contract Date, Not Settlement:

• Exchanged 9 August 2026 or earlier = old rules apply (residential or business is ok)
• Exchanged 10 August 2026 or later = new rules apply (business real property only)

What To Do Now

• Business real property purchase? Nothing changes for you.
• Don’t rush a decision just because of the deadline, get advice first.