Structuring a First Development Through a Trust After the Budget
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Discretionary Trust · First Development · Budget 2026-27
Structuring a First Development Through a Trust After the Budget
A first development is won or lost on structure before it is funded. Here is how to set up the entity to position now and fund later, and how feasibility-first lenders actually read a trust.
Quick Answer
Set the entity before the site, not after. For most first-time developers that means a discretionary trust with a corporate trustee, settled and ready before finance is sought, so you can position now and fund later through private lending and mezzanine finance.
The windows the 2026-27 Budget opens for a first development
A first development comes together in a set order: settle the entity, line up the equity, then bring the funding. The 2026-27 Federal Budget sits in the background of that sequence as a structuring signal, and because the measures that matter most to a first-time developer are forward-dated, the smart move is to settle your structure now and fund later. New-build supply settings from 1 July 2027 (forward-dated), including negative gearing limited to new builds, point capital toward fresh stock rather than existing homes. Alongside that, a minimum tax rate from 1 July 2028 (forward-dated, indicative) is flagged for trust income, with rollover relief from 1 July 2027 (forward-dated) cited as part of the transition.
None of these are law yet, so they are planning inputs rather than settled facts. The point is timing. If you are going to develop, the structure you put in place this year is the structure those settings will eventually act on, which is why getting it right early beats reacting later. The measures themselves are set out in the federal government's 2026-27 Budget tax reform overview, and the read is consistent: supply-side settings reshape what gets built and by whom over the years that follow.
For a builder stepping up from contracting into a first development, this is the moment to position now, fund later. Get the entity, the equity and the feasibility lined up so that when you approach a lender, the file is ready and the structure is not the thing slowing you down. If you want a primer on how the funding side works once the structure is set, our guide on how development finance works covers the mechanics, and development finance sets out who can qualify.
Which entity should hold your first development
For most first-time developers, the answer is a discretionary trust with a corporate trustee, but the right choice depends on your tax position and what you are building. The table below maps common structures against the two questions that matter: how well each one lets you position now before the build, and how cleanly it funds later when you draw on development finance. Read it as a tier map, not a verdict, and confirm the tax detail with your accountant.
The pattern in that table is the reason the discretionary trust keeps coming out ahead for a first project: it protects the assets, lets you distribute income flexibly later, and reads cleanly to a funder. Lenders generally prefer a single-purpose entity holding only the development, separate from your contracting business, so a clean wrapper beats bolting the project onto an existing trading company. Whatever you choose, the exit strategy for the finished stock should be clear before you settle the structure.
How feasibility-first underwriting reads a trust
Feasibility-first underwriting weighs the project before it weighs the people, which is why a trust does not weaken a first development application. A first-time developer often cannot service a development loan on personal income, and they are not expected to. What lenders assess is the total development cost, the gross realisation value, the equity going in, the strength of the builder and a credible exit. The entity matters mostly for who signs and who guarantees, and personal director guarantees from the trustee company directors are standard.
This is also where the funding stack comes in. Senior debt funds the bulk of the build and is repaid first, while mezzanine finance sits behind it to bridge the gap between senior debt and your equity. Where this commonly lands for a first project is a structure that pairs a senior facility with a smaller top-up layer, often through private lending where the project story is stronger than the track record. The cost of the higher layer is typically greater because it carries more risk, indicative and varies by lender.
As this publishes, the Reserve Bank's cash rate target is unchanged and a monetary policy decision is due the same day, so the cost of holding land while you set up a structure is a present-tense consideration rather than a settled forecast. That is one more reason to get the entity ready before you commit capital to a site, so the structure is not what holds you up when the numbers do work.
Position now, fund later: what to set up before you need the money
The builders who get a first development away cleanly tend to do the unglamorous work first. They settle the trust deed and the corporate trustee, line up the equity, get development feasibility on paper and choose the site to fit the structure, not the other way round. By the time finance is sought, there is nothing left to retrofit. Where this commonly lands is a file that a funder can assess on day one rather than a borrower scrambling to form an entity after a deal is already on the clock.
The Budget timeline reinforces the same habit. With the headline changes forward-dated and rollover relief from 1 July 2027 (forward-dated) cited in the transition, the developers who act early on structure are the ones positioned for the settings that arrive later. If you are weighing how your post-development income reads to a home-loan lender once the project sells, our piece on the one doc home loan after the May 2026 Budget looks at that next step.
A first development is a structuring problem before it is a finance problem. A discretionary trust with a corporate trustee protects the project, distributes income flexibly and reads cleanly to feasibility-first lenders who assess the deal, the equity and the builder rather than your payslips. The 2026-27 Budget rewards getting that structure in place early, because the measures that matter are forward-dated.
Key takeaway: Settle your entity, equity and feasibility before you chase a site, so you can position now and fund later.Frequently Asked Questions
A first-time developer should usually structure a discretionary trust with a corporate trustee before any contracts are signed, so the entity is settled, owns the site and is ready to be assessed when finance is sought. Set up the structure to position now and fund later, because the deed, the trustee and the asset-protection design are hard to retrofit once a build is under way.
Speak to a broker and your accountant together so the structure suits both lender expectations and your tax position, and review how private lending fits the plan.
A discretionary trust can qualify for development finance on a first project, because feasibility-first underwriting weighs the project, the equity and the builder rather than the personal servicing of the people behind the trust. Lenders will still expect personal director guarantees from the trustee company directors and clear development feasibility.
The structure does not weaken the application when the feasibility and exit are sound. Our overview of development finance sets out what first or second project developers need to qualify.
A trust structure does not change the core of how lenders assess development feasibility, because the assessment still turns on total development cost, gross realisation value, the equity contribution, the builder and a clear exit. The trust mostly affects who signs, who guarantees and how income is later distributed.
A clean exit strategy matters more to the decision than the entity wrapper itself.
Senior debt is the first-ranking facility that funds the bulk of a development and is repaid first, while mezzanine finance sits behind it to fill the gap between senior debt and your equity. Mezzanine finance typically carries a higher cost because it takes more risk, indicative and varies by lender.
Understanding senior debt and mezzanine finance helps a first-time developer see where private lending fits in the funding stack.
The 2026-27 Federal Budget affects property development structures mainly through forward-dated measures, including negative gearing limited to new builds from 1 July 2027 and a trust minimum tax rate from 1 July 2028, both forward-dated and not yet law. These settings reward positioning a structure now and funding later, with rollover relief from 1 July 2027 cited as part of the transition.
Treat the announced dates as planning signals and confirm details with your accountant, and see how development finance works to support the build itself.
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