Powered by MOMENTUM MEDIA
subscribe to our newsletter

Risk of SMSF lending issues is ‘remote’

Property Investment Professionals of Australia (PIPA) is urging the government to consider alternatives to an outright ban on borrowing in SMSFs, including improved education and a ban on personal guarantees.

Speaking to Mortgage Business’ sister publication, SMSF Adviser, PIPA chair Ben Kingsley said he considers the risk of limited recourse borrowing arrangements (LRBAs) creating any mass problems for SMSFs to be remote, and that issues around borrowing should be addressed in other ways first.

“Let’s start with educating SMSF trustees first by making sure they understand the risks associated with incorporating borrowing into their investment strategies,” said Mr Kingsley.

“Secondly, let’s put some better regulation around the investments they are trying to borrow money on – for example, if they are looking to borrow money to invest in direct property then let’s regulate advice on property investment.”

Mr Kingsley said the government should also be looking at some of the other mechanisms on the lending side that can be changed.

Advertisement
Advertisement

“I would be encouraging lenders to remove the personal guarantee obligation which will then remove risks for the super fund as it removes any further obligation of the trustees or the individuals who are providing those guarantees,” he said.

“Obviously the banks may need to address their pricing in terms of the interest they charge clients by removing that risk, but that would be another solution outside of just putting a ban on lending inside a super fund.”

Restricting SMSF trustees from using LRBAs, Mr Kingsley said, is giving consumers less opportunity to be able to invest for a self-funded retirement.

“The goal of super isn’t necessarily just a savings vehicle; it’s an investment vehicle to allow people to provide for a self-funded retirement to take the pressure off government to provide for people in their retirement,” he said.

 

PROMOTED CONTENT


Risk of SMSF lending issues is ‘remote’
mortgagebusiness

Latest News

The RBA has cautioned lenders and the financial sector against “excessive risk-taking” amid rising asset prices, including looser lendin...

First home buyer loans hit its second highest level in over a decade in February, but levels are expecting to drop as house prices continue ...

A not-for-profit organisation has announced a new grant funding round for social and affordable housing projects in the Northern Territory a...

FROM THE WEB

Join a group of highly informed brokers.

Broker Pulse, a community-driven knowledge base of lender performance Reveal exactly which lenders are making life easiest for brokers and their clients by taking this monthly survey and joining a group of highly informed brokers who leverage these insights every month.

JOIN NOW
podcast

LATEST PODCAST: Tackling the home deposit challenge

Do you expect to see strong uptake of the HomeBuilder scheme?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.