My previous post on the possibility of superannuation funds taking out loans to buy property (“That’s not a Housing Affordability Crisis”) has now been shown to be more than the ravings of a complete loony. A mere 6 days after my post, Robin Bowerman, no less than Head of Retail for Vanguard in Australia started talking a similar line. I’m going to quote from his article on “Super changes open the gearing door” from November 16:
… by investing through an instalment warrant structure it means super funds may be able to gear any of the usual investments a super fund can buy … perhaps a residential property for example. The super fund receives all the rental income and gains.
He has based this on a tax office ruling from September 24 on whether and how installment warrants could be bought by SMSF (self-managed super funds), which are regulated by the ATO. This wasn’t something I included in my grab-bag of references, so it adds to the weight that there’s a-change a-foot.
The implications are interesting to speculate about (other than significant price rises for residential property). For example, will we get a whole heap of funds appearing that buy up houses in a particular suburb, e.g. Toorak. Then, instead of parking their money in a bank account after selling their home and before buying a new one, a vendor could put it in such a fund so that it tracks the rise in house prices to help them avoid a movement in the property market in the mean-time.
