New Build or Established? How the 2026 Rules Changed the Finance for Property Investors
Two separate 2026 changes now treat new homes differently from established ones. Loans for new dwellings sit outside APRA’s cap on high debt-to-income lending, and from 1 July 2027 negative gearing is limited to new builds for property bought after 12 May 2026. Neither makes a new build the better investment by itself, and new builds carry finance risks established homes do not.
The short answer
In 2026 a new build and an established property are financed and taxed differently for investors. Since 1 February 2026, loans to buy or build new dwellings are exempt from APRA’s limit on banks’ high debt-to-income lending. From 1 July 2027, investors who bought established residential property after 7:30pm AEST on 12 May 2026 can no longer deduct rental losses against wages, while new builds keep full negative gearing. Serviceability rules are unchanged for both, and new builds add risks such as settlement valuations and construction timelines.
The two changes that split new from established
1. APRA’s debt-to-income limit exempts new dwellings
From 1 February 2026, the Australian Prudential Regulation Authority limited banks to writing no more than 20% of their new mortgage lending at a debt-to-income ratio of six times or more, with owner-occupier and investor lending measured separately. Loans to purchase or construct new dwellings are exempt, as are owner-occupier bridging loans. The limit applies to the authorised deposit-taking institutions APRA regulates, and it caps a bank’s share of such loans rather than setting a ceiling for any individual borrower.
For most investors this is not the constraint that binds. For an investor with several properties and a high debt-to-income ratio, it can decide which lenders will look at the application at all. The exemption means a loan for a new dwelling does not use up a bank’s high debt-to-income allowance. Our guide on borrowing capacity for Western Sydney investors covers when the limit bites and when serviceability bites first.
2. Negative gearing is limited to new builds from 1 July 2027
The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 is now law. From 1 July 2027, negative gearing of residential property is limited to new builds. Properties held at 7:30pm AEST on 12 May 2026 are exempt from the change. For established housing bought after that time, rental losses can still be deducted against other residential property income, including capital gains, and excess losses can be carried forward, but they cannot be deducted against non-residential income such as wages. New builds keep the existing treatment.
One detail matters a great deal and is not settled in the government’s own summaries. Neither Treasury’s Budget page nor the ATO’s summary of the measure sets out how a new build is defined, for example how off-the-plan purchases, knock-down rebuilds or substantially renovated homes are treated. Have your accountant confirm, against the legislation, that a specific property qualifies before you rely on it. Our guide to how the negative gearing changes affect borrowing capacity covers the lending side and the capital gains change in the same Act.
A tax concession and a lending exemption both point toward new builds. Neither tells you whether the property is worth what you are paying for it.
What stays exactly the same
The changes above sit on top of an assessment that has not moved. APRA expects banks to assess whether you can repay at an interest rate at least 3 percentage points above the loan’s actual rate, and confirmed that buffer on 28 May 2026. It applies to new and established property alike. A lender’s view of your income, living expenses and existing debts is the same whichever property you choose, and how individual lenders treat rental losses in that assessment varies between them.
| Setting | New build | Established property |
|---|---|---|
| APRA debt-to-income limit | Exempt | Counts toward the bank’s 20% allowance at six times income or more |
| Negative gearing from 1 July 2027 | Existing treatment continues | Losses offset only against residential property income, excess carried forward |
| 3 percentage point serviceability buffer | Applies | Applies |
| Value known when you commit | Off the plan: no, the finished home is valued later | Yes, valued as it stands |
Does the new build rule change what you can borrow
Send us your current loans, income and the property you are considering. We will show you how lenders on our panel would assess a new build against an established property for your position, and where the difference actually comes from. No obligation, and no fee at any point.
The finance risks that come with new builds
The policy settings favour new builds. The finance mechanics carry risks that established homes do not, and they are where investors most often get caught.
- Off-the-plan value at completion. The NSW Government warns buyers directly that when you buy off the plan, the finished property may differ from what you expected and be worth less than you paid by the time it is finished. Lenders generally assess the loan against a valuation done near settlement, not the contract price, so if the valuation comes in lower, the gap is yours to fund.
- Time between commitment and settlement. An off-the-plan settlement can be months or years away. Your income, the lender’s policy and interest rates can all change in that time, and an early pre-approval will usually have expired.
- Construction loans work differently. A house-and-land or knock-down rebuild is typically funded with progress payments released stage by stage, with interest charged on what has been drawn. Our guide to construction loan progress payments walks through each stage, and our construction loans page covers the application.
- Rent starts later. Until the home is finished and tenanted, there is no rental income against the loan, which a lender’s assessment and your own budget both need to allow for.
New South Wales gives off-the-plan buyers extra protection: a 10 business day cooling-off period instead of five, a requirement for the developer to get the buyer’s consent, or a Supreme Court order, before ending a contract under a sunset clause, and a disclosure statement attached to the contract. Your solicitor should review all of it before you exchange.
Who each option tends to suit
A new build tends to suit an investor who is near their debt-to-income ceiling with the banks, relies on offsetting rental losses against wage income, and can carry the time and valuation risk of a build or off-the-plan purchase. An established property tends to suit an investor who wants to know the value on day one, needs rent from settlement, or is buying in an area where land content rather than the building drives the long-term result.
Those are tendencies, not rules. The tax outcome is a question for your accountant, and whether the property is a sound investment is a question for you and, if you use one, a licensed financial adviser. What we can tell you is how each option would be financed, what it would cost to hold, and how much room it leaves for the next purchase.
How Intellect Finance can help
We compare how lenders on our panel would assess the same investor buying a new build, an off-the-plan property or an established home, including the effect of the debt-to-income limit and the order in which to approach lenders if you are building a portfolio. We do not give tax advice or recommend a particular property; that belongs with your accountant and, where appropriate, a licensed financial adviser. Credit for the purchase or improvement of a residential investment property is regulated consumer credit under the National Consumer Credit Protection Act 2009, and Best Interests Duty applies. We charge you nothing on any loan type, with no arrangement fee and no clawback recovery fee. Penrith based since 2005, holding Australian Credit Licence 390611.
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Frequently Asked
New build vs established FAQs
What investors ask us about the 2026 changes.
Are new builds exempt from APRA’s debt-to-income limit
Yes. APRA’s limit, in place since 1 February 2026, caps banks at 20% of new lending at six times income or more, measured separately for owner-occupiers and investors. Loans to purchase or construct new dwellings are exempt, as are owner-occupier bridging loans. Serviceability is still assessed in full.
Can I still negatively gear an established property
If you held it at 7:30pm AEST on 12 May 2026, yes, the change does not apply to it. If you bought after that, from 1 July 2027 losses can only be offset against residential property income, including capital gains, and excess losses carry forward. They cannot be deducted against wages. Confirm your position with your accountant.
Does an off-the-plan apartment count as a new build
Neither Treasury’s Budget summary nor the ATO’s summary of the measure sets out the definition, so do not assume. The definition sits in the legislation, and whether a particular off-the-plan, knock-down rebuild or renovated property qualifies is a question for your accountant before you sign.
Can I borrow more for a new build than an established home
Not because of the exemption alone. The debt-to-income exemption affects whether a loan counts toward a bank’s quota, not how much you can service. Your borrowing is still set by the lender’s serviceability assessment, including the 3 percentage point buffer. How lenders treat rental losses in that assessment varies.
What happens if my off-the-plan property values below the contract price
Lenders generally lend against the valuation near settlement, so a lower valuation means a smaller loan than you planned and a larger contribution from you. The NSW Government warns off-the-plan buyers that a finished property may be worth less than they paid. Plan for that before you exchange.
How long is the cooling-off period for off-the-plan property in NSW
Ten business days, compared with five for an established home bought by private treaty. Withdrawing during cooling-off costs 0.25% of the purchase price. Your solicitor should also review the sunset clause and the disclosure statement attached to the contract.
The bottom line
Policy now leans toward new builds on both the lending and the tax side, and for a portfolio investor near the debt-to-income ceiling that lean can be decisive. It does not change the fundamentals. A new build bought at the wrong price, in the wrong place, is not rescued by a tax treatment, and off-the-plan purchases carry a valuation risk that lands on you, not the lender or the developer.
The honest sequence is: check the property on its merits, have your accountant confirm the tax treatment against the legislation, then work out the finance. Doing those in reverse order, choosing the property because of the concession, is how investors end up with the concession and a shortfall at settlement.
Joseph Sukkar
Joseph is Principal Broker at Intellect Finance and has spent more than 25 years in Australian finance, arranging investment, construction, home and business lending from the firm’s Penrith office. Intellect Finance charges clients no fee on any loan type. More about the team.
Sources
Australian Prudential Regulation Authority, APRA to limit high debt-to-income home loans to constrain riskier lending, 27 November 2025, for the 20% limit from 1 February 2026 and the exemption for new dwellings and owner-occupier bridging loans. apra.gov.au
Australian Prudential Regulation Authority, Prudential Practice Guide APG 223 Residential Mortgage Lending, which references the buffer set in Prudential Standard APS 220, for the minimum 3 percentage point serviceability buffer, confirmed 28 May 2026. apra.gov.au
Australian Taxation Office, Tax reform: Boosting home ownership, reforming negative gearing and capital gains tax, last updated 29 June 2026, for the 1 July 2027 start, the 12 May 2026 grandfathering time and the enacting legislation. ato.gov.au
The Treasury, Budget 2026-27 tax system changes, for how losses on established housing bought after 12 May 2026 can be used. treasury.gov.au
NSW Government, Buying property off the plan, for the 10 business day cooling-off period, sunset clause consent, disclosure statement and the warning on value at completion. nsw.gov.au
Important disclosures, general advice warning and licensing
General information only. This article is general information only and does not constitute financial, credit, legal or tax advice. It does not take your personal or financial circumstances into account. Before acting on any information here, consider whether it is appropriate to your objectives, financial situation and needs.
Tax. Intellect Finance is not a registered tax agent. The negative gearing and capital gains changes described here are summarised from Treasury and ATO material. Whether they apply to a particular property, and how, must be confirmed with your accountant.
Investment suitability. Intellect Finance holds an Australian Credit Licence, not an Australian Financial Services Licence, and does not advise on whether a property is a suitable investment. For that, speak to a licensed financial adviser.
Legal. Off-the-plan contracts, sunset clauses and cooling-off rights are legal matters. Speak to a solicitor or conveyancer before you exchange.
Regulatory settings. APRA’s serviceability buffer and debt-to-income limit are prudential expectations on banks, create no entitlement for any borrower, and can change. Reviewed 25 September 2026.
Lender policy varies and changes. Descriptions of common practice are general observations, not any lender’s policy. This page publishes no interest rates and names no lenders. No broker can guarantee approval, pricing, a valuation outcome or a timeframe.
Best Interests Duty. Credit for the purchase or improvement of a residential investment property is regulated consumer credit under the National Consumer Credit Protection Act 2009, and Best Interests Duty applies.
What we charge you. Nothing, on any loan type. No arrangement fee for residential, commercial, corporate, asset, SMSF or personal lending, no fee for complex or specialist lending, and no clawback recovery fee if a loan is discharged early. Lenders pay us a commission on settlement, disclosed to you in writing in our Credit Guide before we provide credit assistance.
About the reviews shown. The reviews displayed on this page are genuine reviews published by clients on Intellect Finance’s Google Business Profile, shown live via a third-party reviews widget. They reflect those individuals’ own experiences and are not a promise of any particular outcome.
Intellect Finance Pty Ltd holds Australian Credit Licence 390611 and is a member of the MFAA and AFCA. Lending criteria, fees and terms apply. Article checked 25 September 2026.
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See how each option would be financed for you
Bring your current loans, your income and the property you are looking at. You get a side-by-side of how a new build and an established property would be assessed, and what each leaves for the next purchase. If neither works on your numbers yet, we will say so. Penrith based since 2005, clients Australia-wide. No fee on any loan type. ACL 390611.
General information only, not tax or investment advice. Confirm tax treatment with your accountant. No broker can guarantee approval, pricing, a valuation outcome or a timeframe.
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