Self-managed superannuation funds (SMSFs) would be banned from directly borrowing for real estate purchases under a new package of economic measures announced by the Australian Labor Party (ALP) to help address the housing affordability crisis.
However the Shadow Treasurer, Chris Bowen, has already admitted that borrowing by SMSFs for housing purchases represents only a very small element among the many factors currently driving up home prices in Australia.
The ALP’s new policy approach will be formally announced later today but extensive pre-briefing of the media has revealed that the Federal Opposition intends imposing a tax on investors who leave properties vacant, a doubling of the application fee for foreigners who invest in homes and a restoring budget funding for a so-called “safe housing fund”.
However it is the restriction on SMSF borrowing arrangements which will be of greatest concern to financial planners and their clients because, if implemented, it would represent a significant change in the current settings.
However the ban represented one of the major elements of the Financial System Inquiry not implemented by the Government.
Speaking to the media, the Federal Opposition leader, Bill Shorten suggested a ban on direct borrowing by SMSFs would “help cool an overheated housing market partly driven by wealthy self-managed super funds”.
He claimed this direct borrowing had “seen an explosion in borrowing from $2.5 billion in 2012 to more than $24 billion today”.