SMSF and Property Schemes

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Reproduced with permission.

Great to see that ASIC are finally taking a closer look at some of the property schemes where the primarily goal of maximising property sales is masked via a purported Self-Managed Superfund (SMSF) strategy.

In this case lease-back agreements where generous returns are guaranteed for a few years providing an inflated perspective of rental incomes.

These properties are often below par assets and consumers often are unable to determine the quality of the investment and are lulled into believing the short term cash flow analysis supports the purchase.

In these types of situations, there is often a lack of independent advice from anyone at all associated with the transaction.

This usually means the developers are in cahoots with other parties needed to complete an SMSF process and everyone has a vested interest in getting their ticket clipped on the way through.

ASIC is not directly responsible for property because the industry is unregulated. However, Peter Kell, deputy chairman of the Australian Securities and Investments Commission (ASIC), says they are monitoring promoters of the schemes as part of a broader nationwide review of property spruiking and real estate deals on offer to SMSF investors. “If these deals are done through self-managed super, then it falls into the category of advice,” Kell says.

This is a space we have been commenting on for a number of years now that needed greater scrutiny so it is promising to see ASIC empowered to take some action.

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