Negative Gearing Changes Push Lenders to Tighten Investor Loans

Major lenders including NAB and Westpac are rebuilding investor serviceability calculators to factor in Labor's negative gearing reforms.

If you have an investment property purchase in the pipeline, or you've been considering adding to your portfolio, the next few weeks represent a genuine inflection point. National Australia Bank has become the latest major lender to overhaul how it assesses serviceability for investor loans, joining Macquarie Bank and white label lender Connective Horizon in hard-wiring Labor's proposed negative gearing changes into its credit systems. Westpac, Commonwealth Bank, and ANZ are all working on similar updates.

The changes stem from the federal government's budget announcement that negative gearing will effectively be confined to newly built properties from 12 May 2026 onwards. While the legislation hasn't yet passed parliament, lenders are treating 12 May as the operative date — and they're restructuring their serviceability calculators accordingly.

What the Major Lenders Are Changing

The Adviser reports that NAB sent a detailed email to bankers and brokers on Monday outlining how it will treat tax losses from geared properties in serviceability tests going forward.

For any purchase where the sale contract was signed after 12 May 2026, NAB will only recognise negative gearing benefits in its serviceability calculation if the property qualifies as a new build under its internal definitions. If that application had already reached unconditional approval by close of business on Tuesday, 26 May 2026, NAB confirmed it would honour the decision without reopening the numbers. For applications that haven't yet cleared unconditional approval, the bank will reassess using the new policy — and for most established investment properties, the negative gearing add-back disappears from the equation.

NAB's updated serviceability calculators are due to be released on Wednesday, 27 May. NAB executive for home ownership Lin Lu described the shift as a responsible response to a major policy change. "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," Lu told The Adviser. "This is about helping ensure customers don't take on debt they may not be able to service if those changes come into effect."

Connective Horizon, the aggregator's white label product funded by Brighten, issued a parallel update on Monday. The lender confirmed that fully unconditionally approved applications would not be disturbed, but that conditional approvals and approvals in principle would be revisited at the point of formal assessment. "Where current conditional approvals are held by your customers, if serviceability is reliant on negative gearing benefits, these loans may not be granted formal approval should negative gearing benefits be removed," the lender told brokers. Director and head of distribution Chris Meaker said the lender expected further policy refinements as the government settled the legislation.

Westpac wrote to brokers last week confirming its current policy settings remain in place for now, but flagged that changes are coming. The bank indicated it expects negative gearing will not be applied to any additional lending amount on established investment properties once its updated policy is finalised. CBA and ANZ are adopting similar stances. Macquarie Bank moved first, stripping most negative gearing add-backs from its investor serviceability calculators on 18 May 2026.

What Counts as a "New Build" Under the New Rules?

Under NAB's framework — which broadly mirrors the government's own definitions — not every newly constructed property qualifies. NAB will treat the following as eligible new builds for serviceability purposes:

- An off-the-plan apartment that has just been constructed - A duplex created by demolishing a single freestanding house - A dwelling built on land that previously had no home on it - A new property being on-sold within 12 months of its first occupation

Properties that do not qualify include extensions to an existing home, replacing one freestanding house with another of a different size, adding a granny flat to an established dwelling, and selling a new property that has already been lived in for more than 12 months.

For most investors considering established homes, units, or townhouses, this means the negative gearing benefit is effectively removed from the bank's serviceability calculation — which flows directly through to reduced [borrowing power](/calculators/borrowing-power). If your property strategy relies on a rental loss to top up your income for loan assessment purposes, it's worth running updated numbers before you commit.

What Investors With In-Flight Applications Need to Do Now

If you signed a contract on or before 12 May 2026, your negative gearing position is protected — lenders have confirmed they will continue recognising negative gearing in serviceability calculations for those deals. Straight refinances that simply replace one loan with another on a property purchased before the cut-off date will also continue to benefit from negative gearing add-backs.

If you're mid-application and haven't yet reached unconditional approval, you should review your file with your broker urgently. The serviceability outcome may shift materially under the revised policy, particularly if the security is an established investment property. Lenders including Connective Horizon have explicitly flagged that conditional approvals will be reassessed at the point of formal approval using whatever policy is in force at that time.

Investors targeting genuine new builds — off-the-plan purchases or construction on vacant land — are in a more favourable position. Negative gearing recognition remains intact for qualifying new builds under the current lender frameworks, though policy details are still being finalised across the board.

For investors who are still deciding where to invest, this is the right moment to compare your options. Our [investor home loan comparison](/home-loans/investor) shows which lenders are currently offering competitive rates for property investors, and our [borrowing power calculator](/calculators/borrowing-power) can help you model what your capacity looks like with and without negative gearing add-backs in the equation.

The practical reality right now: lenders are moving faster than the legislation. Even before the parliament passes the negative gearing bill, Australia's major banks are already treating established investor properties as if the tax benefit no longer exists at the point of servicing. If you're relying on a rental loss to make the numbers stack up, speak with a broker sooner rather than later — the window to act under the old rules is narrowing fast.

[The Adviser](https://www.theadviser.com.au/lender/48477-more-lenders-announce-investor-servicing-reset) first reported these lender policy updates.