Single acquirable asset

The bill introduced into parliament last week proposing amendments to the superannuation borrowing exemptions is, for the most part, welcome confirmation that limited recourse borrowing arrangements are here for the foreseeable future.

However, one concern with the proposed changes is the restriction of these arrangements to 'single acquirable assets' and collections of identical assets with the same market value, particularly in the context of real property.  It would seem from reading the bill and the EM that where, say, a residential house is constructed over 2 lots, each lot will be a single acquirable asset, and the property would have to be held in 2 trusts, with separate loans for each lot.  And this appears to be so, even if the lots are on one title.  Similarly, a fund that wanted to borrow to acquire a strata-titled commercial building would have to have a separate trust and separate borrowing for each lot, despite the lots together comprising the building that the fund wished to acquire.

Ideally, the legislation should recognise that assets with a single use would comprise a single acquirable asset.

It will be interesting to see whether financiers will be willing to enter into arrangements involving multiple loans and multiple trusts to fund what in essence is the acquisition of a single asset that just happens to comprise multiple lots.