Established residential properties — existing houses, apartments and townhouses — have long been the preferred SMSF property investment type due to their immediate rental income, known condition and established suburb track records. The 2026 SMSF residential borrowing ban has changed how SMSFs can access these investments.
What the Borrowing Ban Means for SMSF Established Property Purchases
The ban applies to new SMSF Limited Recourse Borrowing Arrangements for residential property — including established properties. This means SMSFs can no longer take out a new LRBA to purchase an existing house, apartment or townhouse. Outright purchases (without borrowing) remain permitted.
Established Property vs New Property for SMSF Investors
The borrowing ban applies equally to established and new residential property. Neither category can use a new SMSF LRBA. The distinction that now matters is residential vs commercial — not established vs new.
Can an SMSF Still Hold Established Residential Property?
Yes. SMSFs that already own established residential properties can continue to hold them. The ban applies to new acquisitions using LRBAs — not to existing SMSF property holdings.
Frequently Asked Questions
Can my SMSF buy an existing house without borrowing?
Yes. If your SMSF has sufficient cash or liquid assets to purchase outright, the ban does not prevent the purchase of an established residential property.
Does the ban treat established property differently from new property?
No. The ban applies to all new SMSF residential LRBAs regardless of whether the property is established or newly built.
Should SMSF investors now focus on commercial rather than established residential?
Commercial property (where SMSF borrowing remains available) has become significantly more attractive for leveraged SMSF investors following the residential ban. An SMSF specialist can model both options for your fund.
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