u/Raynor_Lending

Hey alI
It has been the talk of the town, and many clients have been asking me about it today, so I thought I'd make a quick post.

Keeping this simple, because there’s already plenty of noise around it.

The main change is that negative gearing is being limited to new builds from 1 July 2027.

That does not mean negative gearing is gone for everyone.

From what’s been announced:

• If you already owned the property before 7:30pm AEST on 12 May 2026, existing arrangements stay in place.
• If you had already signed a contract before that time, but had not settled yet, that also appears to be protected.
• If you buy an established investment property after that point, you may not be able to offset rental losses against wages from 1 July 2027.
• New builds are treated differently, because the government is trying to push investors toward adding housing supply.

So if you signed a contract before Budget night, the negative gearing side appears to be secured for that property.

That means I would not expect this announcement, by itself, to suddenly blow up an ongoing application.

The more interesting bit is what happens next.

Banks have not announced how they will change servicing off the back of this. So right now, we do not know exactly how each lender will treat it.

But I’d be very surprised if this does not eventually flow through to borrowing capacity for investors.

A lot of investor servicing already comes down to rental income, shading, assessment rates, existing debts, buffers and the assumed tax position.

If an established investment property no longer gives the same yearly tax benefit against wages, the after-tax cash flow can look worse.

And if the cash flow looks worse, borrowing capacity can come down.

My guess is lenders will start caring even more about rental yield.

Not just “does the property grow long term?”

More like:

“Does this property actually carry itself well enough under the new rules?”

That’s a different question.

CGT is also changing from 1 July 2027.

The 50% CGT discount is being replaced with a new system based around inflation/indexation and a minimum 30% tax on gains. Existing gains up to 30 June 2027 appear to keep the old treatment, but future gains after that may fall under the new system.

So the short version is:

Negative gearing is more heavily grandfathered. CGT is only partly grandfathered.

That distinction matters.

This is not advice. It is just a quick summary of what has been announced so far.

We still need legislation, ATO guidance and lender policy updates before anyone can be too definitive.

For now, the main thing I’d be watching is this:

Established investment properties probably need to stack up more on rental yield and cash flow than they used to.

There's still a lot unknown about where things will land from a lender policy perspective at this stage. We've been told today, as brokers, that it's business as usual, but I suspect change is on the way.

General info only, obviously.

One thing I always try to explain to first home buyers is that there are basically two separate gateways you need to get through.

1. Do you have enough money to complete the purchase?

2. Can you actually afford the loan repayments?

They sound connected, but they are not always the same problem.

You can have great income and strong borrowing capacity, but if you don’t have enough deposit, it still doesn’t work.

You can also have a decent deposit saved, but if your income, debts and expenses don’t support the loan size you need, it also doesn’t work.

This is where people get caught out.

They’ll say something like:

“If I save another $20k, how much more will the bank lend me?”

The annoying answer is usually: not much.

Extra deposit can absolutely help with the first gateway.

It can help with:

• funds to complete
• LMI
• genuine savings
• stamp duty
• grants and concessions
• fitting into things like the First Home Guarantee or Help to Buy

But once you have enough money to complete the purchase you want, that box is basically ticked.

From there, saving more cash doesn’t magically increase what the bank thinks you can afford.

That second gateway is serviceability.

That’s things like:

• income
• debts
• credit card limits
• HECS
• dependants
• living expenses
• employment type
• lender policy
• the lender’s assessment rate

So if your income, debts and expenses mean the bank will only let you borrow $700k, then saving another $20k doesn’t suddenly make the bank lend you $750k.

It just means you have $20k more cash.

That can still be very useful.

More buffer is good.

Lower loan amount is good.

Less stress is good.

But it is not the same thing as increasing your borrowing power.

A simple way to think about it is:

Max purchase price = max borrowing capacity + usable deposit

But you can be limited by either side.

Some buyers are deposit-limited.

Some buyers are servicing-limited.

Some are both.

A lot of the strategy is working out which one is actually stopping you.

If you’re deposit-limited, then schemes, grants, concessions, family guarantees, genuine savings policy and LMI rules matter a lot.

If you’re servicing-limited, then the focus is more on income, debts, credit limits, HECS, dependants, lender choice and how different banks assess your situation.

This is where brokers can be useful, because different lenders don’t all assess things the same way.

One bank might treat your overtime differently.

One bank might be harsher on your living expenses.

One bank might have a better policy for your type of income.

One bank might give you more room on borrowing capacity, while another might have a better rate but not quite get you where you need to go.

So the goal is not just “save more deposit.”

The goal is to work out which gateway is actually blocking you.

General info only, obviously, but this is one of the biggest mindset shifts for first home buyers.

A bigger deposit helps.

But it does not automatically mean the bank will lend you more.