Twenty-seven properties that are out of bounds for SMSF purchase financing

Self-managed super fund purchases are still quite a new frontier in the realm of property buying.

The shyness for many investors on entering financial markets has helped create this trend.

However, it has a few more challenges than conventional property buying, such as the level of deposit required and the type of property you are allowed to acquire.

We’ve found a list of unacceptable properties that will stop a bank or lending institution providing credit for a self-managed super fund property purchase:

• Units or apartments with less than 45 square metres of living area

• Converted Hotels or motels

• Churches or places of worship (converted or otherwise)

• Residential property with a commercial content or used for a commercial purpose

• Commercial or industrial property

• Relocatable homes

• Leasehold other than Crown Leasehold

• Any property in excess of 50% per borrower in any one completed development that has a maximum of 8 properties in the development (duplexes are acceptable), or any property in excess of 4 per borrower in any one completed development where there are more than 8 properties in the development.

• Boarding houses or hostels

• Brothels

• Specialised student accommodation

• Any property subject to a rental guarantee (display homes and state and federal government properties are acceptable however)

• Any property that is subject to a ‘two tier’ market

• Home units attached to management rights of the complex

• Any property located in a flood zone greater than 1:100 year frequency

• Any property located on a contaminated site, or land holding greater than 40 hectares (100 acres)

• Any property that is used for the purpose of farming

• Specialised or unique dwellings

• ‘Over 55?s dwellings

• Property with a capital value less than $60,000 (land and improvements)

• Any property that will require developments of more than two dwellings on it

• Boundary of property located within 50 metres of high voltage transmission lines

• Properties with partly finished construction work

• Serviced apartments

• Studio apartments or bedsitters

• Any property located on a island that is not accessible by road

• Any property with a ‘lease for life’ covenant on the title

SMSF purchasers should seek advice before committing to a property contract, as the rules are tight.

As always, do your homework!

By Paul Osborne
Tuesday, 07 May 2013


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