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While brokers have noticed a steady uptick in self-managed super fund (SMSF) interest since the budget announcement, the Financial Advice Association of Australia (FAAA) has said that exempting SMSFs from the proposed capital gains tax and negative gearing changes could become the “next sphere of extreme consumer risk”.
In a submission to the Senate economics legislation committee, which is reviewing the first tranche of the government’s budget reforms, the FAAA said the new tax arrangements would create a stronger incentive for investors to use SMSF structures.
“An unintended consequence is that there is now a substantial tax incentive for Australians who want to invest in established residential property to do so via an SMSF,” Sarah Abood, the FAAA’s CEO, said.
“While we support Australians having the opportunity to invest in established residential property via the SMSF structure, we are concerned that many of them will be convinced to do so via high pressure sales tactics without the benefit of financial advice, without a full understanding of the obligations that they are accepting as trustees of a super fund and without appreciating the risks involved with such strategies.”
‘Unscrupulous property spruikers’
The FAAA said the reforms could create opportunities for “unscrupulous property spruikers and operators” to capitalise on the more favourable tax treatment of property held within an SMSF.
The association said it had already observed an increase in social media advertising promoting SMSF property investment since the budget announcement, alongside growth in the number of SMSFs being established.
“While this strategy can be beneficial for consumers, it carries higher risks, including high rates of gearing, very low levels of diversification, illiquidity, and risks that the regular payments required to support the strategy might exceed the ability of the consumer to contribute to their super,” the submission said.
The submission also said that existing government reforms aimed at reducing harmful superannuation switching would do little to address those risks.
Brokers see uptick
Brokers said they are already seeing a broader range of borrowers entering the SMSF conversation.
As of March 2026, there were 672,805 SMSFs, with 1,239,997 members and total estimated assets of $1.06 trillion.
Martin Javernig, founder of SMSF-specialist brokerage Evolution Lending, said to Broker Daily the budget had made SMSFs a more attractive ownership structure for some investor profiles.
“Business owners and higher-income earners have been using SMSF structures for property for years. What the budget has done is bring a new group into the conversation: mum-and-dad investors who wouldn’t previously have looked at this, now asking whether it’s a structure that suits them,” Javernig said.
“The risk is exactly what the FAAA flagged in their submission: when one structure looks more tax-favourable than the alternatives, some people chase the tax outcome and skip the question of whether the structure actually fits their circumstances.”
Javernig said borrowers needed to understand the compliance obligations, liquidity requirements, contribution rules, cash flow considerations, and borrowing restrictions associated with SMSFs, noting that SMSF lending was inherently more complex than standard residential lending.
He said the greater tax appeal of SMSFs following the budget could lead some investors to focus on the wrong factors.
“If the tax settings make SMSFs look more attractive, that’s exactly when people risk confusing a tax incentive with sound retirement strategy,” Javernig said.
Will lenders return to the fray?
The new tax settings could also reshape what was already an evolving SMSF lender market.
While some larger players, notably AMP Bank, have returned to the sector, the major banks have remained largely absent for the better part of a decade.
Commonwealth Bank and Westpac left the market in 2018, National Australia Bank in 2015, and Macquarie Bank in 2019. Australia and New Zealand Banking Group (ANZ) did not make significant moves into the space to begin with.
In the years since, a growing number of specialist and non-bank lenders, including Pepper Money, Firstmac, Better Choice, and Liberty, have all expanded their presence in the sector.
The withdrawal of traditional lenders followed broader regulatory scrutiny around the use of retirement savings for leveraged property investment, particularly in the wake of the 2014 Financial System Inquiry and the banking royal commission.
Costa Arvanitopoulos, mortgage broker at Finni, said while he did not expect a rush of major lenders back into the sector, increased demand could intensify competition among existing players.
“I can see increased competition arising as more of the market considers SMSF lending,” he said.
“This heightened competition could potentially lead to more competitive pricing and greater flexibility, with lenders tailoring their offerings more towards attracting new clients.”
Javernig said that stronger demand could eventually attract more lenders back into the market.
“If demand keeps building off the back of the budget, I’d expect more lenders to look seriously at the space, but SMSF lending requires specialist credit assessment: bare trusts, limited recourse borrowing arrangements, fund liquidity, serviceability,” Javernig said
“That’s not something a lender bolts on overnight.”
[Related: Mortgages no longer Australia’s most protected debt]
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