Borrowing money to buy property is a strategy that is increasingly being promoted to do-it-your-self super funds by property investment lenders, property sellers and financial planners.

While the best guess of the number of DIY funds that own a geared property is in the single thousands, which suggests only 1 to 2 per cent of the 425,000 DIY funds, what is significant is that investing interest is growing. This is despite the fact that it is one of the most complex investment arrangements ever introduced to super.

It is an area of super where the government's review of the superannuation system, known as the Cooper review, cries out for improvements and simplification.

DIY funds are implementing the strategy in increasing numbers, says Vince Scully of SMSF Finance Specialists, with a rising proportion buying residential property.

A year ago, only about 5 to 10 per cent of geared property investments involved residential property. The majority were commercial property.

Today the residential property proportion has increased to about 40 per cent, as growing numbers of sellers have been promoting the strategy to potential investors.

As far as the Cooper review is concerned, all geared investing by a super funds is in its sights. Just before Christmas, in an issues paper that invited public comments about many aspects of super, the review posed such major questions as whether investments and investment arrangements that offered leverage should be available to DIY funds.

Scully says the review is examining some broad issues about super funds and leverage and this may attract some lively suggestions.

They include the most fundamental question - whether leverage should be permitted at all for DIY super funds - and more precise questions including whether changes in 2007 that expanded the application of instalment warrants to assets other than shares have gone too far.

A summary of various tax group meetings released in late December included a comment that the ATO had placed an embargo on giving advice about instalment warrants to allow super funds to borrow while it worked with the Treasury Department on a possible change in the law.

As far as both of these initiatives (the Cooper review and the ATO advice embargo) are-concerned, they have prompted speculation about what could happen.

Craig Fishburn, a director of the Small independent Super Funds Association, says that given the broad issue of leverage and super is being addressed by the Cooper review, he doesn't expect any major changes from the ATO.

That said, it's a super investment area that could do with some serious reviewing. The big problem with geared property investing into super, Fishburn says, is that the rules have been and continue to be adapted from rules that applied to the geared share investments known as instalments warrants.

These had an established structure that included a range of rules and guidelines that allowed super funds to borrow and limit the risk to the warrants themselves and not any other fund assets.

When the Howard government introduced its 2007 changes to super fund borrowing rules, it was initially thought they were going to apply only to share warrants.

However, after advisers and others studied the changes they noted the rules could also be applied to other assets, in particular property.

The trouble with this expansion of gearing entitlement has been that geared investing into shares hasn't translated all that smoothly into property.

Where the difficulties have arisen and what property investors who wish to use gearing must be on the alert for, will be examined next week.

John Wasiliev