Lenders are tightening service requirements as the Labor Party’s proposed tax changes draw closer.
National Australia Bank (NAB) confirmed to Australian Broker that it notified brokers and bankers on Monday about upcoming updates to its serviceability rules. Chief among them, negative gearing will soon be mainly restricted to new-build investment properties.
"We’re continuing to support customers as they navigate the proposed changes to negative gearing announced in the federal budget," said NAB Executive Home Ownership Lin Lu. "While these changes are not yet legislated, they represent a known and foreseeable factor that may affect a customer’s financial position over the life of a loan. As part of our responsible lending obligations, we take foreseeable changes like this into account when assessing serviceability.
"This is about helping ensure customers don’t take on debt they may not be able to service if those changes come into effect," Lu added. "Our focus is making sure customers can comfortably meet their repayments over the life of the loan, not just at the point of approval."
Earlier this month, Australian Prime Minister Anthony Albanese's camp unveiled the 2026 to 2027 federal budget, which included sweeping changes to property taxes across Australia in the upcoming federal budget.
Among them, the government will eliminate the blanket CGT discount and restrict negative gearing to newly built properties under the new budget.
Importantly, for investors, that means starting 1 July 2027, negative gearing for residential properties will only apply to new builds. After that, losses from existing residential properties will only be deductible against rental income or the capital gains from residential properties.
The news quickly sparked debate across the finance and property sectors, with supporters arguing the reforms could improve housing affordability, while critics warn they may deter investment, raise rental prices and disrupt market confidence.
"It is not obvious at this time how a reduced supply of rental properties coupled with increasing demand due to factors, including population growth, can do anything except drive up rental prices for many who are already struggling," said Peter White, interim chief executive officer of the Finance Brokers Association of Australia (FBAA). "It is likely prices on newly-built homes and apartments off the plan will rise as investor demand increases, and this would drag up prices across the entire housing market."
Gerard Burg, head of research at Cotality Australia, added: "There's little doubt that the removal of neg gearing on existing properties heading forward is going to significantly reduce investor demand, because, while rental yields are so low, we're talking about negative cash flow if you're borrowing a substantial amount of money in order to purchase the investment property. There's not going to be a situation where there are too many people buying an existing property at a sort of neutral or positive cash flow in the near term. That's, sort of, really going to provide a creep on the investor side of the market."
Treasurer Jim Chalmers, who delivered the budget, dismissed the criticism, telling reporters it was being driven by opponents with “partisan or commercial interests” who were running an “unhinged scare campaign” against the budget measures.
Despite the backlash, Labor is pressing ahead. On Thursday, Albanese’s team will take the proposed changes to parliament, aiming to move them through quickly.
Reassessments are required for applications submitted and in progress but not yet approved by close of business Tuesday, 26 May 2026. This includes approvals in principle, where the contract of sale was executed after 12 May 2026, and the purchase does not meet the definition of a new build
In addition, for new investment property purchases, if the contract of sale was executed after 12 May 2026, and the application is not fully approved by 26 May 2026, negative gearing can only be used for new builds.
