The maximum 80 per cent loan to value ratio for borrowing with self-managed superannuation funds (SMSFs) is arbitrary and should be increased, according to national accounting firm Chan & Naylor.
Calling on the Government to increase the limit, Chan & Naylor chief executive Sal Carrero said the rule impedes the capacity of investors to make their own investment decisions.
The average SMSF member balance is $456,000, almost 20 times the average non-SMSF superannuation balance of about $25,000, meaning that SMSF trustees were in general more sophisticated investors and should be afforded the flexibility to use appropriate leveraging to build wealth, Carrero said.
The Cooper Review’s two-year sunset clause on the 80 per cent LVR should also be overturned because it will create market uncertainty, he said.
“When governments intervene in the market it creates unintended consequences, which in this case will result in a last minute rush to utilise the maximum 80 per cent lend for fear of its abolition. It’s against the spirit of SMSF legislation to take away individual choice in investment decisions,” he said.
