Lenders urge broker action ahead of resi LRBA ban

Publication Date: Thursday, 25 June 2026
This article originally appeared in Broker Daily.

Lenders specialising in self-managed super funds loans are scrambling to push existing residential contracts through a tight transitional window while urging brokers to ensure their deals are submitted soon.

Non-bank lenders that offer self-managed super fund (SMSF) loans for residential property are urging brokers to rapidly triage files that are currently in flight for residential property, given the likelihood of an impending ban on limited recourse borrowing arrangements (LRBAs) for residential property within superannuation funds.

The urgency follows the Albanese government’s surprise concession to the Greens this week, after it agreed to back a prospective ban on LRBAs for residential property within super funds, in exchange for the Greens’ support for its housing tax reforms on negative gearing and capital gains tax (currently being debated in Senate).

While the proposed ban has not yet been unveiled in detail, it is expected that it will operate prospectively, following a 45-day transition window after the bill receives royal assent.

Prioritise executed contracts, lenders urge

Speaking to Broker Daily, several lenders said the immediate focus is a rapid triage of files currently in flight.

Barry Saoud, Pepper Money’s CEO of mortgages and commercial, commented: “The proposed changes to SMSF lending – particularly restrictions on borrowing for residential property, represent a meaningful shift in the market – and one Pepper Money is watching closely.

“Deals already in progress are not expected to be impacted, provided contracts are secured ahead of any changes, with customers who have already exchanged similarly protected.

“However, there are transactions across the pipeline – signed contracts, approved loans and scheduled settlements – now facing a compressed timeframe. These deals reflect real customers who have committed and incurred costs under a well-established framework. Clear guidance is needed on how these borrowers will be supported through the transition.”

He added: “While these changes may reshape the residential SMSF lending landscape, it’s important to recognise the broader role SMSFs play in helping everyday Australians build retirement savings. For many, these structures form part of a disciplined, long-term strategy to diversify across asset classes and manage financial security over time.”

Jason Azzopardi, CEO of non-bank lender Brighten, said that signed contracts are now the ultimate dividing line between protected clients and those left stranded.

“The government’s decision to move ahead with a ban on LRBA lending for SMSFs investing in residential property has come as a genuine shock to many in the industry, particularly given the role these structures have played in helping trustees diversify their retirement portfolios,” he told Broker Daily.

“For brokers with applications already in our pipeline, our guidance is to prioritise clients who have executed contracts, as this is the key determinant of protection. Where contracts are in place before the commencement date, transactions can continue through to settlement, even if formal approval is still pending.

“For pipeline scenarios where no contract has yet been signed, brokers should assess urgency carefully, as these clients are unlikely to fall within transitional provisions. It’s also important to understand that the proposed 45-day window following royal assent is intended to allow existing transactions to complete, not to initiate new ones.”

Others, such as AMP Bank, said they are heavily focused on guiding their network through the impending transition, but that more details would come once the government unveils them.

“We note the government’s announcement and await the final details. In the meantime, we will continue to support our existing SMSF borrowers and will assist brokers on the transition as new requirements come into effect,” an AMP spokesperson said.

SMSF lenders are also reminding brokers that standard lending parameters remain active until the legislation officially passes.

Tony MacRae, chief commercial officer at non-bank lender Bluestone, urged the industry to remain calm and focus purely on verified updates: “The recent announcement has understandably created a lot of questions across the broker and lender community. From our perspective, it’s important to separate what’s been proposed from what is currently in place.

“Importantly, this is a proposed policy position, and the detail, timing and transition arrangements are still to be clarified. We do expect this will move quickly, but we’ll only make changes based on facts as they emerge.

“The proposed SMSF changes really highlight the value of strong lender and broker relationships. Brokers are looking for clarity, responsiveness and a steady hand, and that’s where we’re focused, providing timely updates, being available to talk through scenarios, and helping them understand how potential changes may impact different clients.”

Similarly, Richard Chesworth, head of specialist distribution at Bluestone, said that while residential SMSF is a highly visible, specialised space, keeping momentum on existing deals is the best path forward.

“While it attracts strong attention, SMSF lending for residential property remains a relatively small part of the overall mortgage market,” he said.

Indeed, a total of $62.7 billion of residential real property was held by SMSFs as at March 2026 – around 6 per cent of total assets allocated.

According to the Prime Minister, LRBA arrangements constitute less than 1 per cent of total residential property borrowing and less than half a per cent of new residential borrowing each year.

Chesworth said: “That said, it’s a highly specialised segment, and one where experienced brokers play an important role supporting self-directed investors looking for control and diversification within their retirement strategies.

‘In terms of what we’re doing right now, we’re continuing to assess and process applications in line with existing legislation and policy settings.

“For deals already in flight, the focus is on maintaining momentum and giving brokers and their clients as much clarity as possible.

“Where it makes sense, we’re encouraging brokers to ensure applications are complete and well-documented so they can move forward without unnecessary delays.

“For brokers, it’s of course best to stay close to the facts and avoid reacting to speculation.

“We do expect the situation to evolve quickly, so we’re working closely with our broker network to keep them informed and to support conversations with clients who may be feeling uncertain.”

Where opportunity remains

While the residential pipeline of LRBAs appears to be on countdown, lenders are quickly pointing brokers towards the silver lining: commercial SMSF lending is completely untouched by the government’s proposed ban.

Business owners and trustees looking to purchase commercial premises through their super funds can still do so under current LRBA frameworks.

Saoud commented: “The opportunity within commercial property remains particularly relevant. For many small business owners, using an SMSF to purchase the premises they operate from continues to be a well-established and effective strategy – supporting both business cash flow and long-term wealth creation through a concessionally taxed environment.

“At Pepper Money, we’re actively engaging with industry bodies, closely tracking developments, and progressing our own assessment of alternative lending structures to ensure we stay ahead of change and continue supporting brokers and their customers with confidence.

“More broadly, maintaining choice and competition in the market is essential. Specialist and non-bank lenders have played a critical role in supporting borrowers responsibly in this space, particularly following the major banks’ exit.

“As the landscape evolves, our focus remains on helping brokers navigate change with clarity – identifying where opportunities continue to exist and ensuring they have the confidence to support their customers through it.”

Brighten CEO Azzopardi told Broker Daily: “While this change impacts residential SMSF lending, Brighten remains committed to supporting brokers with a diverse product range, including continuing to offer SMSF lending for commercial property, and will provide ongoing updates as the final legislation is confirmed.”

Bluestone’s MacRae said this moment was an ideal moment for forward-thinking brokers to expand their skill sets and salvage their future SMSF volumes.

He said: “It’s important not to see this purely as a constraint. There’s still opportunity in the near term within the current framework, and looking ahead, commercial SMSF lending remains unchanged.

“This is a good moment for brokers to build their understanding of that space, given the different rules, obligations and risk considerations involved, and how it can continue to support client needs.

“More broadly, SMSF lending, whether residential or commercial, is a specialist space. Brokers with experience and confidence here will continue to add significant value, and where it sits outside a broker’s core focus, working with the right lending partner can help ensure clients still receive the right guidance and outcomes.”

Brokers concerned about SMSF mortgage prison

The unexpected policy shift has sparked widespread shock and dismay across the mortgage and property investment industries.

For brokers specialising in investment credit advice, the announcement has triggered immediate alarm, as residential SMSF loans form a substantial portion of their core business.

Many have reached out to Broker Daily to voice their frustration that such a major lending change has been announced without due consultation and to query how the lenders will be treating resi SMSF loans moving forward.

Indeed, several have voiced concerns that if SMSF lending for residential property is banned, existing borrowers will be unable to refinance their loans. As such, this could leave borrowers on uncompetitive loans – or mean they are trapped in an SMSF mortgage ‘prison’.

Others have lamented that the change will negatively impact ‘mum and dad borrowers’.

“Wealthy investors can pay cash for their properties; it’s mum and dad investors that typically require a property loan in their SMFs that will be predominantly affected. Uncertainty around super, property tax, and investment rules makes retirement planning much harder,” one Broker Daily reader said.