Fifty-nine residences across 37 levels. No more than two per floor. With 80 per cent now sold, what remains at <a href="https://www.apartments.com.au/new-apartments/madeline-by-mosaic-broadbeach-22-mary-avenue-broadbeach-qld-4218">Madeline by Mosaic</a> is a short list.

Madeline was always conceived at a scale that sits outside the normal register of Gold Coast apartment living. The residences are half- and full-floor configurations, with the largest spanning more than 400 sqm, dimensions that place them closer to the penthouse end of the market regardless of where they sit in the building.

That scale is the organising principle of everything else: how the floorplans are laid out, how the materials read, how the connection between inside and outside works.

[smartcode_project:default project_id=150135 project_image_fid=355941]

The interiors were developed in collaboration with <a href="https://www.apartments.com.au/architects/fraser-partners-0">Fraser &amp; Partners</a>, the architecture practice&nbsp;<a href="https://www.apartments.com.au/developers/mosaic-property-group">Mosaic</a> brought in as design partner for the first time on this project. The palette runs to natural stone, textured timbers, and soft metallics, materials chosen as much for their tactile quality as their appearance.

Light cleverly shifts across surfaces through the day, and the design is explicit about wanting that to be noticed. Full-height glazing runs across the primary living areas, and where the building faces east toward the ocean, those walls of glass are doing real work: framing a view corridor that the site's position directly opposite Broadbeach State School's playing fields keeps permanently open.

That outlook is the site's most consequential asset. In a suburb where new towers continue to rise, a protected view line is genuinely rare, and the Mary Avenue address secures it. Residents at Madeline will look out over open parkland rather than the rear of another building, a distinction that becomes more meaningful with each new development approved nearby.

[smartcode_project:default project_id=150135 project_image_fid=355939]

The private outdoor spaces are sized to match the residences themselves. Terraces on the upper levels frame uninterrupted ocean panoramas, and the planning ensures that living areas extend into those outdoor zones rather than treating them as separate attachments. The flow between the two is part of the design intent, not an afterthought.

Inside, the finish specification reflects the same approach. Rich stone benchtops, warm timber joinery, bespoke hardware, each element specified to hold up over time rather than read as a moment in a particular trend cycle.

[smartcode_project:default project_id=150135 project_image_fid=3409]

Beyond the residences, the amenity offering extends that register. A lap pool and sun deck anchor the outdoor space, alongside a magnesium pool, cold plunge, steam room, and sauna.

A commercial-grade gymnasium, residents' lounge, library, and boardroom round out a programme that functions more like a private members club than a standard building amenity floor.

Construction has commenced under Mosaic's in-house building arm, with completion scheduled for late 2028.

[smartcode_project_cta:default project_id=150135]

Joel Robinson

Madeline by Mosaic delivers penthouse-level living across every apartment

Developer Fortezza Group is the latest to take its new apartment development, <a href="https://www.apartments.com.au/new-apartments/the-belvedere-5-7-church-street-nelson-bay-nsw-2315">The Belvedere in Nelson Bay</a>, to the NSW Government.

Fortezza, predominantly a South East Queensland developer, is the latest to apply for State Significant Development&nbsp; status through the NSW Government's Housing Delivery Authority, a pathway becoming favoured by developers to speed up the approval process.

They are planning 57 two- and three-bedroom apartments across 5-7 Church Street and 42 Donald Street, near d'Albora Nelson Bay Marina. The diverse apartment mix has sizes from just over 80 sqm to the largest three-bedroom penthouses that reach nearly 200 sqm.

<img alt="Fortezza" data-entity-type="file" data-entity-uuid="090360e1-66d7-43ad-b686-aba81f173bf2" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-29%20at%2010.22.40%E2%80%AFAM.png?VersionId=DMqF96eBZolqSAAAcugX0l66ueWng66m" />

Fortezza calls the project a "piece of Istria in Nelson Bay,"&nbsp;referring to the largest peninsula in the Adriatic Sea, shared by Croatia (90%), Slovenia, and Italy, which is known for its Roman history, Venetian-style coastal towns and inland hilltop villages.

They say the The Belvedere is strategically positioned at the apex of Nelson Bay, offering unrivalled views of the ocean, the bay and captivating topography of the area.

"Our commitment to maintaining the integrity of every view and sight line has been relentless," Fortezza Group says.

"Through extensive modelling and analysis, we ensure that each apartment enjoys the natural beauty of Nelson Bay, regardless of future developments. Each design element is carefully curated to harmonise with our European heritage, drawing profound inspiration from the Roman architectural marvels in Istria. The arches, the cascades of greenery and the stonework that define our project pay homage to the structures that once exemplified Roman grandeur."

Residents will have access to a pool, communal green spaces, an office and a coffee shop.

First look: Fortezza Group takes The Belvedere, Nelson Bay apartment development, to NSW Government

SEQ developer&nbsp;<a href="https://www.apartments.com.au/developers/keylin-group">Keylin</a>&nbsp;is the latest to jump into the hot Kangaroo Point market, filing plans for a prime site on Lambert Street.

The 52-unit development, predominantly made up of two-bed apartments, will sit on a 1,012 sqm site at 39 Lambert Street, within the&nbsp;Kangaroo Point Peninsula’s Shafston Precinct.

The 15-storey scheme by <a href="https://www.apartments.com.au/architects/jackson-teece">Jackson Teece</a>&nbsp;is anchored by a strong focus on mid-sized apartments, with 48 two-bedroom and four three-bedroom dwellings forming the mix. The project includes three basement levels, as well as ground and mezzanine parking, delivering a total of 66 car spaces.

<img alt="First Look: Keylin targets Brisbane’s mid-market with 15-storey Kangaroo Point proposal" data-entity-type="file" data-entity-uuid="0df78d49-0723-442f-917e-fe29f4eb02c6" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/2_1.png?VersionId=Ud0OP4FZCGFHLvwFWbaeTcYq8Fc2mtdh" />

Planning documents describe the proposal as “a high-density residential outcome that integrates with its context and encourages urban consolidation and the efficient use of land in a well-serviced, inner-city location.”

The building adopts a slender tower form across 15 levels, including a rooftop communal terrace. Its design is shaped by setbacks and orientation that respond directly to neighbouring buildings, achieving up to 20 metres of separation to the adjacent Point Hotel and between 9 and 17 metres to nearby residential developments.

A key design driver is the integration of subtropical and biophilic elements. The architectural concept, described as an “elevated garden sanctuary,” draws from the natural character of the Kangaroo Point cliffs, incorporating landscaped ledges, deep planting zones, and extensive greenery throughout the façade. Curved balconies and layered planting soften the tower’s vertical form, while the lower levels feature heavier landscaping and screening to create a more human-scaled street interface.

<img alt="First Look: Keylin targets Brisbane’s mid-market with 15-storey Kangaroo Point proposal" data-entity-type="file" data-entity-uuid="95bc4974-fcbd-4a9a-9dfb-95b8e1977187" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/4.png?VersionId=o8hwItpcfKBglOaTH8Hv7MmVOphZF_Fg" />

Residents will have access to a rooftop amenity offering spanning approximately 262 sqm, including a pool and spa, gym, lounge areas, and flexible wellness spaces. Landscaping is embedded throughout the building, with over 280 sqm of planted areas integrated across the façade and rooftop.

Kangaroo Point has been popular for developers in recent years. Mosaic Property Group has almost sold out its two Kangaroo Point buildings,&nbsp;<a href="https://www.apartments.com.au/new-apartments/the-bedford-by-mosaic-16-30-prospect-street-kangaroo-point-qld-4169">The Bedford by Mosaic</a> on Prospect Street, and <a href="https://www.apartments.com.au/new-apartments/the-carter-by-mosaic-77-linton-street-kangaroo-point-qld-4169">The Carter Building on Linton Street</a>.

Kenlynn has <a href="https://www.apartments.com.au/new-apartments/130lambert-112-130-lambert-street-kangaroo-point-qld-4169">130Lambert</a>, just up the road from Keylin's proposal, while Pikos has two projects in the area.

Keylin targets Brisbane’s mid-market with 15-storey Kangaroo Point apartment development

"A legacy to last 100 years."

That's the view of Brisbane developer&nbsp;<a href="https://www.apartments.com.au/developers/consolidated-properties">Consolidated Properties Group</a> (CPG), which has just been given the green light to develop its <a href="https://www.apartments.com.au/new-apartments/47-skyring-terrace-newstead-qld-4006">Skyring Terrace, Newstead tower</a> on what is being pitched as "the last true riverfront address at Newstead."

CPG will now begin a VIP release, with buyer enquiries open ahead of priority outreach to registered clients in May.&nbsp;

Access to the as yet unnamed project will be limited, with CPG confirming a staged release strategy targeting a select group of buyers before any broader market launch.&nbsp;

<img alt="DA approved for last true riverfront address in Newstead" data-entity-type="file" data-entity-uuid="f4ab3090-a2b8-46a8-a4f3-4ec16b5b25b9" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Enscape_2025-09-18-13-10-37.jpg?VersionId=_9OV7Adc_zdCldf58WkP0iiagz3Ed3yd" />

Construction is scheduled to commence in August 2026, with <a href="https://www.apartments.com.au/builders/hutchinson-builders">Hutchinson Builders</a> expected to be on site in the coming weeks preparing the sales office.&nbsp;

The approved development comprises 227 apartments across a 25-storey tower with more than 75% having northeast river views. There is also an absolute riverfront six-storey boutique building of only 12 residences which will each enjoy more than 21 metres of river frontage.&nbsp;

Designed by <a href="https://www.apartments.com.au/architects/woods-bagot">Woods Bagot</a>, the project adopts a contemporary interpretation of Brisbane’s classical architecture, with a focus on enduring materials including brick and stone.&nbsp;

<img alt="DA approved for last true riverfront address in Newstead" data-entity-type="file" data-entity-uuid="bfe7254d-25c3-44bb-9a46-ed658d0aab8a" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Enscape_2025-11-05-00-57-36.jpg?VersionId=O29la.BVNnSLxL0JVzvEETE8NaYIn3XG" />

CPG Chairman and CEO Don O’Rorke says the approval marks a significant milestone for the group’s $1.5 billion plus riverfront development pipeline including Gloriette at Yeerongpilly.&nbsp;

“This will be a new signature building for the Brisbane skyline and riverfront,” O’Rorke said. “We want this building to be considered one of Brisbane’s best in 100 years.”&nbsp;

CPG Head of Residential James MacGinley says the design prioritises longevity and permanence over short-term trends.&nbsp;

“Woods Bagot’s design will stand the test of time,” MacGinley said.&nbsp;

“First and foremost, these are beautiful homes designed to enjoy river views that will never be built out. However, the heart of this design goes beyond the ‘now’ and draws from the past to create an enduring legacy for the future. We expect these homes to become very tightly held and passed from generation to generation.&nbsp;

The project will form part of CPG’s broader riverfront portfolio, with a fully fitted out sales office opening later this year.

&nbsp;

"A legacy to last 100 years" as Consolidated Properties approved for Newstead tower

Nearly a year after purchasing the former Leo's Fine Food &amp; Wine supermarket in Kew for a reported $52 million, Melbourne developer <a href="https://www.apartments.com.au/developers/orchard-piper">Orchard Piper</a>, in a consortium with billionaire James Packer, has filed development plans for the site.

The proposal includes just under 200 apartments on the 6,835 sqm block, which spans <a href="https://www.apartments.com.au/new-apartments/26-36-princess-street-kew-vic-3101">26-36 Princess Street and 11-15 Brougham Street</a>. Approval is being sought through the Department of Transport and Planning’s (DTP) Development Facilitation Program (DFP).

The buildings, designed by Wardle, will vary in scale and rise up to 18 storeys. One-, two-, three- and four-bedroom apartments will be offered, along with townhouses. Ten per cent of the total dwellings will be allocated to key worker housing.

The development will also include 19 new retail premises, comprising a mix of shops, restaurants and cafés, including a dedicated space for a high-quality produce offering similar to Leo’s.

<img alt="Kew" data-entity-type="file" data-entity-uuid="67cc85a5-a9d8-4eaa-95ae-fd93762d3297" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-29%20at%208.15.07%E2%80%AFAM.png?VersionId=_p57VJNE2w16xNXB4ISvu3mnVHDDk86R" />

Orchard Piper noted the development is "designed to revitalise the Junction with high-quality housing and retail, while also improving the public realm."

"Assembling an expert team, we've been working with leading architects Wardle and landscape architects Oculus on a site-sensitive design. Wardle is one of Australia's pre-eminent architectural practices, and its founder, John Wardle, is a former long-term Kew resident with an intimate knowledge of the area.

"After close to a year refining the plans, our current opposition embodies Kew's unique character and meets the community's needs, including detailed consideration of the surrounding building design, streetscape conditions and broader planning context."

On top of the extensive retail component, the opportunity to deliver offsite public realm works, involving the council owned land to the south, would include a comprehensive new landscaped laneway strategy that connects Athenaeum Place into the site, a new public park, and the relocation of the public parking currently on the site to the adjoining council land.

<img alt="Kew" data-entity-type="file" data-entity-uuid="02da73ff-e9d9-4e6a-8b6c-75c6f4cb3b01" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-29%20at%208.15.12%E2%80%AFAM.png?VersionId=NXlzip8H0suSqc.X2H6nLKZr6LB1joJ." />

Orchard Piper, led by Luke Mckie and Rick Gronow, is currently delivering The Carter building on St Kilda Road and One Toorak Place in Toorak village.

Kew has been a popular suburb for new development in recent years. The likes of Piccolo, ANGLE, and Carpe are delivering projects in the area.

&nbsp;

&nbsp;

First look: Orchard Piper, James Packer's Kew development revealed

Borrowing

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GUEST OBSERVATION
Australia’s lowest ever Reserve Bank cash rate – 1.5% – is about to be consigned to history.
On Tuesday Governor Philip Lowe made it clear he plans to cut it in two weeks’ time. The money market cash rate (from which all other rates derive) will then fall to 1.25%.
After that, if betting in the market is right, he will cut the cash rate to just 1% by Christmas.
Speaking in Brisbane, Lowe said the Reserve Bank board <a href="https://www.rba.gov.au/speeches/2019/sp-gov-2019-05-21" target="_blank">was of the view that</a>:
"Inflation was likely to remain low relative to the target, and that a decrease in the cash rate would likely be appropriate. 
"A lower cash rate would support employment growth and bring forward the time when inflation is consistent with the target. Given this assessment, at its meeting in two weeks’ time the board would consider the case for lower interest rates."
The bank is forecasting a tick up in economic growth from the present 2.3% to 2.75% by the end of the year and a fairly steady unemployment rate.
But here’s the thing. He was keen to emphasise that those forecasts only applied if he cut rates twice this year – that’s twice, before the end of the year.
<hr>
Reserve Bank cash rate since 1990
<a href="https://images.theconversation.com/files/275782/original/file-20190521-23832-y56vnk.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/275782/original/file-20190521-23832-y56vnk.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a>
<a class="source" href="https://www.rba.gov.au/statistics/cash-rate/" target="_blank">Reserve Bank of Australia</a>
<hr>
He is planning to do it because the economy is weak, much weaker than his political masters suggested during the election campaign. Consumer spending is “unusually soft”.
"Over the past three years, household disposable income has increased at an average rate of just 2.75%. This compares with an average of 6% over the preceding decade.
"As this period of weak income growth has persisted, it has become harder for households to dismiss it as just a temporary development – as something that will pass quickly. The lower rate of income growth has also made it harder for households to pay down debt. The end result has been that many people have decided to adjust their spending plans."
The cuts are just the start
It isn’t much good cutting interest rates if mortgage rates don’t follow. That will be up to the banks. But until this week, even if they had passed it on, there would have been so many would-be borrowers it wouldn’t have helped.
That’s because, whatever the interest rate and whatever a would-be borrower’s ability to make payments, banks have generally refused to lend to anyone who couldn’t cope with a rate of 7.25%.
It’s been the doing of the Australian Prudential Regulation Authority – one of the Reserve Bank’s sister organisations. It regulates banks and super funds and other institutions in order to keep the financial system stable.
In December 2014 it directed the institutions it supervises to impose serviceability assessments that incorporated a buffer of at least two percentage points above the loan product rate they were offering and a minimum floor rate of <a href="https://www.apra.gov.au/sites/default/files/141209-Letter-to-ADIs-reinforcing-sound-residential-mortgage-lending-practices.pdf">at least 7%</a>.
That meant that if new mortgage rates were 5%, as they were at the time, the lenders had to satisfy themselves that the borrower could cope with 7%. As new mortgage rates fell to 4.5% they still had to satisfy themselves that the borrower could cope with 7%.
Banks have needed unreasonably high buffers
APRA’s directive stated that “prudent practice would be to maintain a buffer and floor rate comfortably above these levels”, meaning that in practice most lenders wouldn’t lend to anyone who wasn’t able to cope with the mortgage rate climbing to 7.25%, no matter how unlikely that was becoming.
On Tuesday this week, a few hours before Governor Lowe delivered his speech, it wrote to the institutions again, <a href="https://www.apra.gov.au/sites/default/files/letter_consultation_on_revisions_to_prudential_practice_guide_apg_223_residential_mortgage_lending.pdf" target="_blank">telling them that</a>: "the low interest rate environment is now expected to persist for longer than originally envisaged. This may mean that the gap between actual rates paid and the floor rate may become unnecessarily wide."
It was proposing to remove “reference to a specific 7% floor”.
The required serviceability buffer would climb from 2% to 2.5%, and it would no longer expect lenders to use a rate “comfortably above” that buffer.
Soon, they’ll be able to lend more…
While strictly speaking the letter notified lenders of a one-month consultation period, what it really did was notify them that the changes were about to be implemented.
In recent months most new mortgage rates have been below 4.5%, with some high-quality borrowers able to get rates as low as 3.6%.
The new arrangements will allow banks to assess them on their ability to make payments on a 6% to 7% loan instead of a 7.25% loan.
Should the next two cash rate cuts be passed on, it would allow them to assess lenders on their ability to repay a 5.5% to 6.5% loan.
It would represent a substantial easing of credit standards for new borrowers.
..up to 10% more
My calculations suggest it would increase the borrowing capacity of home buyers by as much as 10%, enough to have a material positive impact on the housing market.
APRA’s move (almost certainly taken in consultation with the Reserve Bank) both makes a cut in the Reserve Banks’s cash rate less imperative and more potent.
As interest rates get lower, further cuts seem to have been losing their ability to get people and businesses spending and borrowing, something the Governor would have been thinking of when he referred in his speech to the “limitations” of relying on just one instrument to boost the economy.
It would also be up to the government to provide “additional fiscal support” (which means extra spending or tax cuts) including through spending on infrastructure and “policies that support firms expanding, investing and employing people”.
The first of his rate cuts, due in a fortnight, will have more impact than it would have had APRA not acted.
Or perhaps not as much as he would have hoped if the banks, carrying big costs as a result of the misdeeds uncovered in the royal commission, don’t pass it all on.<img src="https://counter.theconversation.com/content/117500/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;">
Warren Hogan, Industry Professor, University of Technology Sydney
This article is republished from <a href="http://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/cutting-interest-rates-is-just-the-start-its-about-to-become-much-much-easier-to-borrow-117500" target="_blank">original article</a>.
</body></html>

j.ballantyne1990-6AQqhLzZaK

Cutting interest rates is just the start. It’s about to become much, much easier to borrow

<html><body>
The prospect of rising interest rates has more borrowers wanting to lock into fixed-rate loans, says a new study. 
More than a third of Aussies (35.5 per cent) looking to take out a home loan would go for a fixed-rate loan, according to Gateway Credit Union. The split rate option was favoured by 34 per cent and the variable rate by 30.7 per cent. 
And over half of those surveyed said they would be in it for the long haul — choosing to fix their home loan rate for five years.
The sentiment for fixed loans is high in spite of the Reserve Bank of Australia keeping interest rates on hold and at a record low for the past several months. Banks, however, have been making out-of-cycle home loan rate increases, citing tough regulatory environment.
Of the major cities, Brisbane residents are the second most likely in the country to want to fix their mortgage after Sydneysiders, with 35.1 per cent saying they would choose a fixed rate home loan over a variable or split option, the www.realestate.com.au reported citing The Courier Mail.
The news comes after Mortgage Choice’s national home loan approval data found Queenslanders were the keenest on fixed rates, with 24.74 per cent of all March loans being locked in.
As to the preferences by age, the younger generation (18 to 29 year olds) are more inclined to take out a fixed rate home loan, followed by the 50 plus age bracket.
Gateway CEO Paul Thomas was cited in the article saying speculation around changing market conditions had rattled borrowers.
“We know property prices are sky high, compound that with low wage growth, high levels of household debt and out of cycle rate hikes and you can expect that consumers might be worried about maintaining a loan, especially if they have no control over repayments because of a fluctuating rate,” Thomas said.
“Borrowers have enjoyed low rates for quite some time but the results suggest that we may be in for tougher times ahead.”
These findings suggest borrowers think that once rates start to shift upwards they won’t be coming back down again for some time, he added.
Borrowers would do well to consider fixing part, or all, of your home loan. 
Omniwealth’s Andrew Zbik suggested borrowers take several steps, such as building a cash buffer, having an offset account and budgeting carefully.
Zbik said he suggests to clients to have at least six months of expenses put aside as a cash buffer.
“This will help to shield you from any immediate increases in interest rates and give you time to adjust any spending commitments,” he said. 
According to the RBA, only one-in-three households have enough cash on hand to meet one month’s mortgage payments.
Offset accounts are another way to put your surplus cash to work, Zbik said. Your savings and everyday cash flow will be used to reduce the repayments on your home loan. For example, if you have $100,000 of loan outstanding and you have $10,000 in the offset account, the bank will only charge you interest on the $90,000.
He also suggested disciplined budgeting using automatic budget tracking programs such as Moneysoft or MoneyBrilliant.
“Knowing where you spend your money will help you to prepare for where interest rates need to be before cashflow gets tight,” he added.
 
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jonathanchancellor-7SQnKwU6yx

More borrowers favouring fixed-rate loans

<html><body>
GUEST OBSERVER
The last 12 months have been a roller coaster ride for SMSF limited recourse borrowing arrangements. I thought I’d take the opportunity to re-cap what’s happened.
FSI
The biggest change — or more accurately the biggest non-change — is the government’s decision not to action the recommendation coming out of the Financial System Inquiry.
The final FSI report — released in December 2014 — had recommended that the government:
[r]emove the exception to the general prohibition on direct borrowing for limited recourse borrowing arrangements by superannuation funds.
More specifically, it stated:
Government should restore the general prohibition on direct borrowing by superannuation funds by removing Section 67A of the Superannuation Industry (Supervision) Act 1993 (SIS Act) on a prospective basis.
It described the problem as follows:
… growth in superannuation funds’ direct borrowing would, over time, increase risk in the financial system … the Inquiry notes an emerging trend of superannuation funds using LRBAs to purchase assets. Over the past five years, the amount of funds borrowed using LRBAs increased almost 18 times, from $497 million in June 2009 to $8.7 billion in June 2014.
Naturally, this was a cause for concern for many in the SMSF industry. Also, some felt that the recommendation unfairly targeted all LRBAs where only some or a minority posed any concern. Of course there are risks with any borrowing, but I have seen many SMSF trustees carefully plan and meticulously implement LRBAs which greatly added to an SMSF’s ability to provide retirement benefits. Such carefully thought out investments added only a commensurate amount of increased risk for the increased amount of return.
The recommendation was a particular concern for those SMSF trustees who had signed contracts to buy properties off-the-plan. With such purchases typically one must wait well over a year before the apartment is built and a bank is ready to execute loan documentation. If the government changed the law in the meanwhile, such SMSFs could have been left in a tricky position.
Luckily, the government has adopted a ‘wait and see’ approach. More specifically, on 20 October the government responded to the FSI as follows:
The Government does not agree with the Inquiry’s recommendation to prohibit limited recourse borrowing arrangements by superannuation funds.
While the Government notes that there are anecdotal concerns about limited recourse borrowing arrangements, at this time the Government does not consider the data sufficient to justify significant policy intervention.
Accordingly, LRBAs are still allowable … at least for the time being!
Bank policies
The last 12 months have seen a marked increase in difficulties in getting a bank to agree to lend to SMSFs. Some banks appear to flat out refuse to enter into new LRBAs for the acquisition of residential real estate. As at the date of writing, it is too soon to say with certainty, but due to the government not banning LRBAs (as set out above) it is hoped that the major banks will re-enter the residential LRBA market.
New tax legislation
The passing of the Tax and Superannuation Laws Amendment (2015 Measures No. 2) Act 2015 (Cth) was a positive change. It clarifies that a look through approach can be applied to the bare/holding trust that is a mandatory feature of LRBAs.
This new law inserted into the Income Tax Assessment Act 1997 (Cth) the concepts of an ‘instalment trust’ and an ‘instalment trust asset’. These include respectively an LRBA bare/holding trust and the asset that is owned via the bare/holding trust.
The legislation goes on to provide that where an investor (eg, an SMSF) has a beneficial interest in an instalment trust asset under an instalment trust, the asset is treated as being the investor’s asset instead of being an asset of the trust.
It gives the following examples:
<ul>
<li>A dividend in respect of the asset is paid to the instalment trust (ie, the bare/holding trustee). Under the new law the dividend is treated as if it had been paid directly to the investor.</li>
<li>A trustee of an instalment trust (ie, the bare/holding trustee) disposes of the instalment trust asset. Under the new law any capital gain or loss is made by the investor, not by the trustee.</li>
</ul>
Also, although the changes were inserted into the income tax legislation, they also extend to GST. For example, the recently inserted s 235 820(5) of the Income Tax Assessment Act 1997 (Cth) contains the following example:
If the trustee [of the instalment trust] has a net input tax credit under the GST Act, the [SMSF] must apply the credit to reduce the investor’s cost base for the instalment trust asset (even if the [SMSF] is not registered or required to be registered for GST purposes).
In truth though, many were not too excited by the passing of the Tax and Superannuation Laws Amendment (2015 Measures No. 2) Act 2015 (Cth) as it simply confirmed what has already been industry practice for many years.
Related party lending
Naturally, it is possible for the lender to an SMSF to be a related party.
In 2010, in Australian Taxation Office Interpretative Decision ATO ID 2010/162 the ATO stated that ‘there is no contravention of section 109 of the SISA if the terms [of a related party SMSF loan] are more favourable to the SMSF [than had the parties been at arm’s length].’
Then, the NTLG Superannuation Technical minutes of June 2012 record that the following two questions were put to the ATO:
If a related party lender offers a discounted rate of interest to an SMSF under a section 67A borrowing arrangement, would the discount be considered a contribution received by the SMSF?
Can an SMSF enter into a borrowing arrangement … with a related party if a zero rate of interest is charged by the related party lender and only principal repayments, with no imputed interest, are made throughout the loan term in accordance with the loan agreement?
The ATO answered both in terms favourable to taxpayers (ie, no to the first and yes to the second).
Further, in the general NTLG minutes of December 2012, the ATO stated:
The ATO position on low rate loan arrangements and LRBA is that that they do not generally invoke a contravention of the SISA, do not give rise to non-arm’s length income under section 295-550 of the Income Tax Assessment Act 1997 (ITAA), do not invoke Part IVA of the ITAA 1936 and are not considered to give rise to contributions to the SMSF just from that one fact alone.
Accordingly, many had read this as being a ‘carte blanche’ for low — or even nil — interest related party LRBAs. At DBA Lawyers we had never been a fan of such arrangements and of course ATO comments in NTLG minutes are not binding.
Then, in December 2014 the ATO released Australian Taxation Office Interpretative Decisions ATO ID 2014/39 and ATO ID 2014/40. These both considered related party LRBAs with nil interest being charged and both stated that the ATO’s view is that the arrangements did give rise to non-arm’s length income.
Accordingly, the position that DBA Lawyers has long been in favour of is now broadly well accepted by all, namely, that related party LRBAs should be on the same terms that would be agreed with an arm’s length lender.
Conclusion
The last year has shown that LRBAs are here to say (at least for the foreseeable future), but we must be just as careful as ever in their set up. This care includes ranging from ensuring that a bank will lend, up to ensuring that — where there is a related party — the terms of the loan are reflective of what is arm’s length.
This article is for general information only and should not be relied upon without first seeking advice from an appropriately qualified professional.
 
Bryce Figot is a lawyer at DBA Lawyers and <a href="https://www.dbalawyers.com.au/" target="_blank">can be contacted here</a>.
 
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Recap on SMSF limited recourse borrowing arrangements

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Westpac has announced new home loan offers, including rate discounts and cash-back incentives.
Its new interest rate on the Flexi First Options Home Loan will be 4.19%.
The spring-time offer will also waive the $600 establishment fee.
“Customers are the big winners with our Spring Home Loan offers,” Westpac general manager of third party distribution, Tony MacRae said.
 “Spring is our key home loan season and our supporting campaigns provide great value for customers, especially those borrowers that are looking to pocket some savings.”
For more information, <a href="https://www.westpac.com.au/personal-banking/home-loans/variable/first-home-loan/" target="_blank">click here</a>.
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