Construction Finance From 1 July 2026: What Changes for Builders
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Construction Finance · FY27 Reset · New Build
Construction Finance From 1 July 2026: What Changes for Builders
From 1 July 2026 a cluster of settings that shape construction finance reset at once, from a proposed permanent instant asset write-off to a shifting negative gearing rule and steady non-bank appetite. Here is what actually changes and how to get your finance ready.
Quick Answer
From 1 July 2026, several settings that shape construction and development finance reset together. The instant asset write-off is set to become permanent (announced in the 2026-27 Budget, not yet law), negative gearing tilts toward new builds, and non-bank appetite stays firm. Most builders prepare by lining up their construction loan structure and exit plan early.
What Changes for Construction Finance From 1 July 2026
Three settings that builders lean on reset inside the same window from 1 July 2026. The instant asset write-off is set to become permanent for eligible businesses, announced in the 2026-27 Federal Budget and not yet law. The new-build negative gearing carve-out, intended to apply from 1 July 2027, was announced in the same Budget and is not yet legislated, so it reads as policy direction rather than a settled rule, tilting investor demand toward newly built dwellings. And bank macroprudential settings have been held steady, which keeps non-bank and specialist funders active in the lane.
None of these change how a draw schedule works or how a lender sizes a facility. What they change is the planning picture around the build, the exit, and the financials a credit team eventually reads. The standards that matter most, your loan to value ratio, your loan to cost ratio, and your sell-down plan, are the same on 2 July as they were on 30 June. The wider construction rules behind a build, including the National Construction Code, are maintained separately by the Australian Building Codes Board.
Your FY27 Construction Finance Readiness Scorecard
The clearest way to use the reset is to score where your project sits now against what to confirm from 1 July. This is the readiness scorecard I run through with builders on the ground right now, and it answers the question they keep bringing me this month: what is genuinely different, and what is just noise?
The pattern is worth reading carefully. The columns that move are tax and demand settings, not finance mechanics. The rows that stay green, presales coverage, drawdown timing, exit planning, are exactly what lenders weigh first, and they do not flinch at a new financial year. If you score green on the finance rows, the date is rarely the deciding factor.
How the Capital Stack and Exit Still Drive the Decision
The finance decision still runs on capital stack sequencing across senior, mezzanine and equity, and on a credible exit. From the broking side, what I am setting up with builders now is the same backbone we always have: confirm site acquisition and feasibility, set the senior facility, then layer mezzanine finance only where the numbers genuinely need it. The 1 July changes sit on top of that backbone, they do not replace it.
When the Reset Matters Less Than the Runway
For projects already past practical completion with stock left to sell, the reset matters less than the runway. There, a caveat loan or other short-term funding can hold a position while the main facility unwinds, and a commercial property loan can take out completed, income-producing stock. If you are new to how the staged structure fits together, the explainer on how development finance works is the place to start.
What to Lock In Before 1 July
The reset rewards builders who treat the date as a planning marker rather than a starting gun. Before 1 July, the work that pays off is unglamorous: get the current financials into shape so the income read after lodgement is clean, confirm the feasibility still holds at today's build costs, and pressure-test the exit so the sell-down assumption is realistic rather than hopeful. None of that depends on the new settings, but all of it is what a credit team actually weighs.
Line Up the Funder Before the Build Facility Matures
The single most useful step is to map the facility you will need against the stage the project is at, then line the funder up early rather than waiting for the build facility to mature. A builder who walks in with feasibility, presales and an exit already documented gives an assessor very little to push back on. The construction hub and the construction loan pack set out the structure stage by stage, so you can prepare the file before the financial year turns rather than scrambling after it. Builders who prepare this way tend to find the new financial year is a quiet formality rather than a hurdle, because the lender is reading the same fundamentals it always has, just with cleaner numbers and a clearer exit in front of it.
From 1 July 2026, the settings around construction finance reset, but the finance fundamentals do not. The proposed permanent instant asset write-off and the new-build negative gearing direction reshape the tax and demand picture, while presales, drawdown timing and a credible exit remain what lenders look at first. Non-bank appetite holding firm keeps the lane open for builders the major banks have stepped back from.
Key takeaway: Score your project on the finance fundamentals first, then let the 1 July settings sharpen the numbers, not set the timing.Frequently Asked Questions
From 1 July 2026, the way construction finance is assessed does not get rewritten, but several settings reset in the same window. The instant asset write-off is set to become permanent for eligible businesses, announced in the 2026-27 Budget and not yet law, negative gearing tilts toward new builds for the financial year that follows, and non-bank construction appetite stays firm as bank macroprudential settings hold. Most builders prepare by lining up their development finance structure and exit plan early.
The proposed permanent instant asset write-off does not change how a construction loan is structured, but it can change the cashflow picture a lender reads. Eligible plant and equipment deductions can shift the figures in your financials, which feeds the serviceability assessment. The tax treatment is a question for your accountant, while the finance read sits with a broker who can map it against your loan to cost ratio and facility position.
The new-build negative gearing carve-out points investor demand toward newly built dwellings, which is a structural tailwind for builders producing new stock. For a developer, that can support the sell-down side of a project rather than the finance approval itself. The lending decision still turns on the same fundamentals, so it pays to confirm your loan to value ratio and exit plan against current commercial property loan policy.
Non-bank lenders sit outside the APRA debt-to-income cap, which applies to authorised deposit-taking institutions, and new-dwelling construction loans are treated separately again. That distinction is why specialist and Tier-2 funders keep filling the construction gap left by the major banks. A caveat loan or other private funding can also bridge a short cashflow timing point while the main facility runs.
Whether a builder applies for construction finance before or after 1 July 2026 depends on where the project sits, not the calendar alone. If site acquisition and presales are ready, there is rarely a reason to wait, since approvals take time to package. If your income evidence improves once the new financial year starts, a One Doc home loan or an alt-doc structure may read more cleanly after lodgement, which is worth confirming with your accountant.
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