Speaking at last week’s national conference of the SMSF Professionals’ Association of Australia (SPAA) – an industry body representing accountants, financial planners and others specialising in self-managed superannuation services – shadow minister for financial services Bernie Ripoll MP said the Opposition has “serious concerns”.
“Since SMSFs have been able to borrow money under limited recourse arrangements for investment in real estate, there have been concerns expressed by stakeholders and regulators that such arrangements may not be appropriate for some SMSFs, and that ‘spruikers’ – and I’m going to say it, including some real estate agents – providing such advice could lead to a higher risk of instability in the sector,” Mr Ripoll said.
The shadow minister said that politicians and stakeholders such as SPAA – which has publicly opposed SMSF ‘property spruiking’ – need to keep a “watching brief” of the sector and safeguard against SMSFs becoming a “vehicle for speculative demand”.
However, at the same time, Mr Ripoll acknowledged that research suggests while the “risks for some individual SMSFs may be high... overall, only a small share of SMSF funds are invested in this area and SMSF borrowings (relative to assets) is relatively small”.
Addressing the same conference, Australian Securities and Investments Commission (ASIC) spokesperson Greg Tanzer said the corporate regulator is closely watching businesses that may be advising or making recommendations to SMSF trustees regarding property investment.
“These promoters may not be complying with the law,” Mr Tanzer said.
Mr Tanzer's comments follow a warning ASIC issued to the real estate industry in November last year, in which agents were told they must be appropriately licensed before recommending investors use an SMSF to invest in property.