The proposed ban on new SMSF residential borrowing arrangements is the most significant change to SMSF property investing since LRBAs were introduced in 2007. For SMSF investors with a property strategy, this is not the end of property investing through super — it is a reset that rewards those who move quickly and think strategically.
The Strategic Landscape Post-Ban
Three types of SMSF investors exist right now:
- Those with existing residential LRBAs. Grandfathered. No action needed. Continue as planned.
- Those planning a new residential LRBA. The window is closing or closed. Pivot to commercial or cash residential purchase.
- Those rebuilding their strategy from scratch. The biggest opportunity — commercial property, alternative assets and hybrid strategies.
Strategy 1: The Commercial Property Pivot
Commercial property — warehouses, offices, retail, medical centres — remains fully available for SMSF LRBA borrowing. Yields are significantly higher than residential (5–7% vs 2.5–3.5%), lease terms are longer, and the business real property exemption creates unique tax structuring opportunities. This is the most direct pivot for investors who had planned a residential LRBA.
Strategy 2: Cash Residential Purchase
The ban applies only to new LRBA arrangements — not to outright cash residential purchases. SMSFs with sufficient balances (typically $600,000+) can still acquire residential property outright. No bare trust required, simpler administration, and full flexibility to sell or redevelop as needed.
Strategy 3: Unlisted Property Trusts
SMSF investors who want diversified property exposure without direct property management can access commercial property through unlisted property trusts. These provide exposure to institutional-grade commercial assets at lower entry points.
Strategy 4: Listed REITs
Australian Real Estate Investment Trusts (A-REITs) provide liquid, diversified property exposure through the ASX. A-REITs covering industrial, retail, office and healthcare assets give SMSF investors commercial property exposure with daily liquidity.
Strategy 5: Hybrid Portfolio — Direct Commercial Plus Listed REITs
The most sophisticated SMSF property strategy for 2026 combines a direct commercial property holding (warehouse, office or medical centre) as the income anchor, supplemented by A-REIT exposure for liquidity and diversification.
Whether you’re buying your first investment property, building a portfolio, or exploring SMSF property investment, the Collings Property Platform gives you access to off-market opportunities, portfolio tracking, investment tools, and property insights powered by GeeVee AI. Join free today and start building your property future. collings.com.au/portal
Frequently Asked Questions
What is the best SMSF property strategy after the 2026 borrowing ban?
For most SMSF investors, the commercial property pivot is the most direct and tax-effective alternative. Commercial LRBAs remain available, yields are higher, and the business real property exemption adds a unique structuring benefit.
Can SMSFs still buy residential property in 2026?
Yes, using fund cash (no LRBA). Only new residential LRBAs are banned for new acquisitions.
Where can I find off-market SMSF commercial property opportunities?
The Collings Off-Market Property Portal specialises in sourcing commercial and industrial opportunities for SMSF investors before they reach the open market. Join free at collings.com.au/portal.
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