What happened, in short
- The Housing Industry Association said on 19 August 2026 that SMSFs should be allowed to keep borrowing to build or buy additional new homes until the Government publishes modelling of the ban’s impact.
- HIA’s survey of Australia’s largest detached home builders found 3,613 signed contracts involving SMSF borrowing that had not started construction when the policy was announced. Builders expected around 2,415 of them to be cancelled.
- HIA estimates the restriction could reduce detached home commencements by around 3.5 to 5%, equivalent to about 4,000 to 5,500 fewer detached homes a year.
- HIA says those estimates exclude a potentially larger effect on apartments, where investor pre-sales can be critical to project finance.
- HIA wants a published cost-benefit analysis and the release of government data on how many new homes have been financed through SMSF borrowing.
The Housing Industry Association has called on the Federal Government to let self-managed super funds continue borrowing to build new homes, arguing that the ban on new SMSF borrowing for residential property, which took effect on 10 August, is cutting housing supply without evidence that it delivers a public benefit.
In a statement on 19 August, HIA said legislation expected to be introduced into Parliament that day offered an opportunity to allow SMSFs to keep borrowing for new homes, and it released survey results and estimates of the ban’s effect on the home building pipeline.
HIA’s estimate of the effect on detached home starts
Source: HIA, 19 August 2026. Excludes apartments.
What HIA found
HIA surveyed Australia’s largest detached home builders. It found 3,613 signed contracts involving SMSF borrowing that had not commenced construction when the policy was announced. The builders expected around 2,415 of those contracts to be cancelled.
On a wider view, HIA estimated that the restriction could leave detached home commencements around 3.5 to 5% lower than they would otherwise be, equivalent to around 4,000 to 5,500 fewer detached homes in a year. HIA said those estimates do not include what could be a larger effect on apartment construction, where investor pre-sales are often critical to securing finance for a project.
What HIA is asking for
HIA pointed out that modelling had been published on the housing supply effects of other Budget measures, and argued the same standard should apply to a policy that directly restricts finance for new housing. If a comprehensive assessment showed that banning SMSF borrowing for new homes delivered a net public benefit, HIA said, the Government could make that case, but until then Australia should not sacrifice housing supply without evidence.
What HIA is asking the Government to do
- Allow SMSFs, at a minimum, to keep borrowing where the investment finances the construction or acquisition of an additional new home.
- Undertake and publish a comprehensive cost-benefit analysis of the restriction.
- Include the impact on detached housing, apartments, rental supply, revenue and affordability.
- Publish the number and value of residential properties acquired using SMSF borrowing, and the share that are new homes.
Source: HIA, 19 August 2026.
HIA also said government agencies already collect extensive information on SMSFs, their borrowing arrangements and property transactions, and called for that data to be published so industry can see how many new homes have been financed through SMSF borrowing.
Background: how the ban came about
The ban on new limited recourse borrowing arrangements for residential property was agreed between the Government and the Greens in late June to secure Senate passage of the Government’s first tranche of tax reform legislation. The Bill received Royal Assent on 26 June, and the ban took effect on 10 August after a 45-day transition. Existing SMSF residential loans are grandfathered, refinancing is still allowed, and SMSFs can still borrow for eligible business real property.
HIA says the ban took effect without published modelling of its impact on housing supply, rental supply, apartment pre-sales or progress towards the Government’s housing targets.
What it means for builders
Contract cancellations
For builders who sell to SMSF investors, HIA’s survey puts numbers on what many were already seeing: signed contracts that relied on SMSF borrowing and had not started are at risk of cancellation. Builders in that position should check each contract’s finance conditions and deadlines, talk to the buyers early about whether they can proceed with other funding, and plan their pipeline assuming some of those jobs will not proceed.
Cash flow and deposits
Cancelled contracts can leave builders with deposits to deal with, pre-construction costs incurred, and gaps in the programme. How deposits and costs are handled depends on the contract terms and the reason for cancellation. Builders should get advice before retaining or refunding money on a cancelled contract.
Pipeline planning
Combined with higher interest rates and the Reserve Bank’s observation that new housing loans are declining noticeably, the SMSF ban adds to the pressure on detached home demand in the second half of 2026. Builders who depend heavily on investor sales should be diversifying their pipeline where they can.
Watch the legislation. HIA’s call is for Parliament to carve out borrowing for new homes. Whether that happens will depend on the Government and the Senate. Until any change is legislated, the ban applies as it stands.
Handling a cancelled contract
When a buyer who relied on SMSF borrowing cannot proceed, the contract’s terms decide what happens next. Many residential contracts include finance conditions with deadlines; if the condition is not met by the deadline, one or both parties may be able to end the contract, with the deposit refunded or dealt with as the contract provides. Other situations, such as a buyer withdrawing after the finance condition has been satisfied, are handled differently.
The practical steps are to read the contract, communicate with the buyer in writing, document any costs already incurred, and get legal advice before keeping any deposit or claiming costs. It is also worth asking whether the buyer can proceed another way, such as using the fund’s own money or buying in their own name, before treating the job as lost.
Why apartments may be hit harder
HIA’s estimates cover detached homes. It warned that the effect on apartments could be larger, because apartment projects typically need a level of pre-sales before lenders will fund construction. If investors who would have bought off the plan through their SMSFs drop out, a project may not reach its pre-sale target and may be delayed or shelved. For builders and trades working in medium- and high-density construction, that is a pipeline risk worth watching.
The policy tension
The SMSF ban sits awkwardly alongside other Government policy. The May Budget’s tax changes, which take effect from July 2027, are designed to direct investors towards new homes by keeping negative gearing and the existing capital gains treatment for eligible new builds. The SMSF ban removes one way investors financed new homes. And the Government has committed to the National Housing Accord target of 1.2 million well-located homes, which requires more commencements, not fewer.
Supporters of the ban have argued it closes a loophole used by property promoters and reduces risk inside the superannuation system. Industry groups argue that, at the very least, the restriction should not apply to new homes that add to supply.
Know your buyers
The broader lesson for builders is to understand how their buyers finance their homes. A pipeline that depends heavily on one type of buyer or one type of finance is exposed to policy changes like this one. Builders who track the mix of owner-occupiers, first-home buyers, investors and SMSF buyers in their sales can see a change coming and adjust their marketing, product and pricing earlier, rather than finding out from a run of cancellations.
What to watch
- The Parliamentary debate on the legislation introduced this week, and any amendment on new homes.
- The National Housing Supply and Affordability Council’s quarterly report, due tomorrow, for its view on supply and progress against the Accord.
- Builders’ contract cancellations over the coming months, which will show whether HIA’s survey expectations are borne out.
Questions builders ask
What did HIA say about the SMSF borrowing ban?
On 19 August 2026, HIA called for SMSFs to be allowed to keep borrowing to build or buy additional new homes until the Government publishes modelling showing the ban’s impact and benefit.
How many home contracts does HIA say are affected?
HIA’s survey of large detached home builders found 3,613 signed contracts involving SMSF borrowing that had not started construction; builders expected about 2,415 to be cancelled.
How many fewer homes could the SMSF ban mean?
HIA estimates detached home commencements could be about 3.5 to 5% lower than otherwise, around 4,000 to 5,500 fewer detached homes a year, not counting apartments.
Is the SMSF borrowing ban still in force?
Yes. It took effect on 10 August 2026. HIA is asking Parliament to allow borrowing for new homes, but any change would need to be legislated.
Sources
- Keep SMSF finance flowing to new homes while evidence is assessed · Housing Industry Association · 2026-08-19
- Ban on new SMSF borrowing for residential property now law · Exant Advisory · 2026-06-29
- Statement by the Monetary Policy Board: Monetary Policy Decision · Reserve Bank of Australia · 2026-08-11
Published 20 August 2026. General information for builders, not legal, financial or engineering advice for a specific job. Check current requirements with the relevant regulator or standard before relying on them.
