Olga Ramos and her husband Loui began their investment journey in 2012, establishing a self-managed super fund (SMSF) as part of a long-term plan to future proof their family.
With advice from financial advisers, accountants and lawyers, the couple decided the SMSF would provide a suitable structure for their investment strategy.
More than a decade later, they currently own four investment properties across Sydney including a residential and commercial property in Norwest, a medical suite in Bella Vista, an apartment in Chatswood along with their family home in Kellyville.
The couple’s most recent purchase was made before newly announced changes affecting SMSF investors.
As part of an agreement with the Greens to secure Senate support for budget changes targeting negative gearing and the capital gains tax concession, the government agreed to ban the SMSF borrowing for residential property.
“I hadn’t heard of the specific regulatory changes, but obviously we had to sort of push forward the exchange the contract so that we wouldn’t be affected as well,” Ms Ramos said.
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Olga Ramos and her husband Louie, who own four SMSF properties. Picture: Tim Hunter.
However, Ms Ramos said the proposed changes were not the driving force behind the couple’s investment decisions.
“The recent SMSF changes didn’t really influence our decision because our investment decisions are never based on one factor,” she said.
“We consider the quality of the development, location, long term market, fundamentals, the developers, track record, relative value, or our financial goals as well.”
For Ms Ramos, off-the plan property has been a key part of the couple’s investment strategy.
“We’ve really preferred off-the-plan for our investment properties because it aligns with our timing and investment strategy — it lets us stay liquid while still positioning for future growth, rather than tying up all our capital upfront on an established property,” Ms Ramos said.
“It also means we can consider and acquire multiple investment properties, as long as the timing is right.
“That combination of flexibility now and upside later has been the main driver for us.”
While there are those who are not as concerned by the changes, some experts are warning of unintended consequences, pointing to the decision disadvantaging ordinary Australians, undermining retirement saving strategies and weakening competition in lending markets.
The Ramos’s most recent SMSF investment purchase was prior to the new changes. Picture: Tim Hunter.
“Affordability is important, but drawing the line between existing versus new property based on who is able to use their super as a form of finance is the wrong mechanism for separating first homebuyers and investors,” founder of bRight Agent and property expert Aaron Scott said.
“Any proposed changes should be drawn along property price lines, not who has money in their super.”
Mr Scott said drawing the line between using your SMSF savings, or cash, is starting to encroach on freedoms of investment.
“If you don’t want investors bidding on the same property as first homebuyers then fine, limit investment to $2m + band, but don’t start legislating on what kinds of properties or investments people can use within their superannuation,” he said.
“There aren’t a lot of first homebuyers jumping in at the $2m mark, so why not open that up to investors as well?”
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Some experts are questioning the government’s SMSF changes, saying this will disadvantage ordinary Australians, undermine retirement saving strategies and weaken competition in lending markets. Picture: NewsWire / Martin Ollman
Non-bank residential mortgage lenders have also raised concerns about the changes.
“What this does is shut down a tightly regulated and important financial service with a long record of safe operation,” Liberty Financial CEO James Boyle said.
“While it’s a small part of the broader lending market, for working Australians with an SMSF it has a really important role in their retirement savings strategy.
“Preventing the use of modest borrowing for residential property will disadvantage many Australians and limit their ability to maintain a diversified portfolio, particularly in times of global and market uncertainty.”
The industry said those most affected will not be wealthy speculators or professional investors, but working Australians using SMSFs as part of a disciplined, long-term retirement strategy.
“The premise that SMSF residential property borrowers are wealthy is far from the truth.
“Our portfolio reflects a broad range of Australians, many using relatively modest SMSF balances as a pathway to a form of home ownership,” Pete Lirantzi CEO of Resimac said.