Commercial offers solid ground after tax temblor

Australia's commercial property lending market has shifted after new legislation replaced the 50% CGT discount. The reform introduced an inflation-indexed cost base and a minimum 30% tax on real gains for residential property. Commercial assets have been carved out of new negative gearing restrictions, leaving their existing tax treatment intact. Senior figures from La Trobe Financial, Woodbridge Capital, Thinktank and Equity-One outline what the reforms mean for brokers. They also examine why execution certainty now outweighs headline rate.

What do Australia's recent property tax changes mean for commercial property lending?

Commercial property lending in Australia has benefited from legislation replacing the 50% CGT discount with an inflation-indexed cost base and a minimum 30% tax on real gains for residential property. Commercial assets were carved out of the new negative gearing restrictions, leaving their existing tax treatment intact. Enquiries from residential investors exploring commercial property have risen sharply as negative gearing benefits on established dwellings disappear. Cory Bannister, senior vice president and chief lending officer at La Trobe Financial, says the shift is already visible. 'The recent legislative changes represent a generational tax shift, but for commercial lending the outcome remains broadly positive', Bannister says. Joel Harrison, national manager of commercial partnerships at Thinktank, agrees: 'Commercial property remains largely unaffected by the reforms and continues to offer attractive opportunities for investors and business owners'.

How do commercial property yields compare with residential investment after the CGT tax reform?

Commercial property yields now sit at 5.5–7%, well above the 2–3% residential yields investors previously accepted in exchange for negative gearing benefits. Many commercial leases also pass outgoings such as council rates and insurance to the tenant, strengthening the cash flow case further. The reform has also reached SMSF lending: new rules ban limited recourse borrowing arrangements for residential property while leaving commercial borrowing through SMSFs untouched. Andrew Torrington, co-founder, managing director and chief investment officer of Woodbridge Capital, says the commercial case was always structural. 'Commercial property remains fundamentally an income-producing asset, and most commercial borrowers make investment decisions based on rental income, asset quality, debt servicing capacity and the underlying business case, not solely on capital gains tax concessions', Torrington says.

What does current loan performance data show about commercial property lending in Australia?

Arrears and valuation data across specialist non-bank lenders point to a market settling into stability. Knight Frank's Australian Horizon 2026 report found industrial capital values rose 3.1% on average over the past year and retail capital values rose 2.0%. Cory Bannister, senior vice president and chief lending officer at La Trobe Financial, says portfolio data reflects that picture. 'The encouraging story is that we're continuing to see resilience across our total portfolio, including residential and commercial, where arrears levels remain within historical ranges', Bannister says. Andrew Torrington, co-founder, managing director and chief investment officer of Woodbridge Capital, confirms arrears at Woodbridge Capital remain very low and loan performance continues to track in line with expectations. Both frame this as a period of greater stability rather than a recovery from distress.

Why are borrowers valuing execution certainty over headline rate in commercial lending?

Execution certainty has overtaken headline rate as the primary consideration in commercial borrowing decisions. Andrew Torrington, co-founder, managing director and chief investment officer of Woodbridge Capital, puts it directly: 'Borrowers are looking for more than just the lowest interest rate, they value certainty of execution, speed, flexibility and a lender they can rely on to deliver', he says. Joel Harrison, national manager of commercial partnerships at Thinktank, sees the same pattern. 'Interest rates remain an important consideration, but they're no longer the only driver of lending decisions. Borrowers are placing greater value on flexibility, certainty of execution and working with lenders that understand the nuances of commercial transactions', Harrison says. Cory Bannister, senior vice president and chief lending officer at La Trobe Financial, adds that consistency of appetite matters most on complex transactions.

What is driving commercial property refinancing activity in Australia?

Strategic motivations rather than financial pressure are behind most commercial property refinancing conversations in Australia. Joel Harrison, national manager of commercial partnerships at Thinktank, says borrowers are looking to improve cash flow, release equity, consolidate facilities or align their lending structure with the next stage of their strategy. Maurice Corsi, national sales manager at Equity-One, observes the same breadth of drivers in enquiries. 'A borrower might refinance or restructure because of a maturing facility, to release equity, changing liquidity requirements or to ensure their funding still suits their needs. It's rarely one single driver behind the decision', Corsi says. Andrew Torrington, co-founder, managing director and chief investment officer of Woodbridge Capital, adds that many borrowers are moving away from banks whose credit appetite has narrowed in development finance and residual stock toward specialist non-bank lenders.

How is technology changing commercial credit decisions for non-bank lenders?

Technology is accelerating assessment in commercial credit decisions without replacing the underwriting judgement that underpins them. Cory Bannister, senior vice president and chief lending officer at La Trobe Financial, says many commercial transactions resist algorithmic assessment. 'Technology enhances our decision-making; it certainly doesn't replace it', he says. Maurice Corsi, national sales manager at Equity-One, points to fraud prevention as a growing priority, with stronger identity verification and document validation processes now central to every credit decision at Equity-One. Andrew Torrington, co-founder, managing director and chief investment officer of Woodbridge Capital, is direct on ai: 'I don't see AI replacing experienced credit professionals anytime soon. Lending is ultimately about assessing risk, understanding people and making judgement calls that often sit well beyond what historical data alone can tell you', Torrington says. Joel Harrison, national manager of commercial partnerships at Thinktank, says the biggest gain is removing administrative friction.

Why are brokers underestimating the commercial lending opportunity in Australia?

Brokers are capturing only a fraction of the commercial lending opportunity available within their existing client base. Joel Harrison, national manager of commercial partnerships at Thinktank, notes brokers now write more than 80% of new residential home loans, yet commercial broker market share is estimated at around 35–40%. That gap often sits among business owners and investors who will eventually need more sophisticated funding. Cory Bannister, senior vice president and chief lending officer at La Trobe Financial, says the most capable brokers think beyond placing a deal. 'The most successful brokers won't simply know where a deal fits, but they'll understand which funding partner is best suited to help their client achieve their broader commercial objectives', Bannister says. Maurice Corsi, national sales manager at Equity-One, adds that residual stock facilities are becoming part of the overall funding strategy as sell-down periods extend.

Roundtable participants

• Cory Bannister: senior vice president and chief lending officer, La Trobe Financial; alternative asset manager with approximately A$20 billion assets under management; broad product range spanning residential, commercial and SMSF lending.
• Andrew Torrington: co-founder, managing director and chief investment officer, Woodbridge Capital; non-bank lender and investment manager with 30+ years in property finance; more than $6 billion in loans deployed over the past decade with zero loan impairments.
• Joel Harrison: national manager of commercial partnerships, Thinktank; broker-only non-bank lender established in 2006; expanded into SMSF lending in 2013, residential in 2018 and private lending in 2024; recently increased maximum loan size to $10 million.
• Maurice Corsi: national sales manager, Equity-One; SME commercial loan specialist with more than 30 years' experience providing property-backed finance; Westlawn became a major shareholder in 2022; parent company COG Financial Services Limited.