Two of the three housing tax measures passed in June were drafted to shield new construction. The third, which started on Monday, was not.

From Monday, a super fund cannot borrow to buy a house.

It can still borrow to buy a shop, a warehouse or a factory. That distinction is the whole change.

Everything else follows from it, including one problem that lands squarely on residential builders and has barely been mentioned anywhere.

At a glance

What changed: From 10 August 2026, a new borrowing arrangement inside a super fund can only be used to buy real property that is used in a business.

What survives: Existing loans. Refinancing. Any contract binding before 10 August, even if it settles later.

What it hits: Residential investment property, and vacant land.

What nobody has measured: The effect on apartment projects.

What actually changed

The change sits in Schedule 5 of the Treasury Laws Amendment (Tax Reform No. 1) Act 2026. The Act received Royal Assent on 26 June, and this schedule commenced on the forty fifth day afterwards.

It is one paragraph long.

Super funds have never been allowed to borrow freely. Section 67 of the superannuation legislation prohibits it. Section 67A then creates a narrow exception, permitting a limited recourse borrowing arrangement where the money is applied to acquire a single eligible asset.

The amendment does not touch either of those. It narrows the definition of what counts as an eligible asset, adding that where the asset is real property, it must be business real property.

That structure matters more than the shorthand suggests. By tightening the definition rather than the prohibition, the change leaves property failing the business test outside the exception altogether.

Nothing was banned outright. Funds can still borrow, still hold property, still refinance. What changed is what a new loan can buy.

One technical note. The provision applies to regulated superannuation funds generally, though in practice these arrangements are used almost entirely by self managed funds.

Definition: business real property

Defined in section 66 of the Superannuation Industry (Supervision) Act 1993.

A freehold or leasehold interest in real property, where the property is used wholly and exclusively in one or more businesses.

The business does not have to be run by the fund. The test is about how the property is used, not who owns it.

A limited exception covers farmland. Primary production land does not lose its status only because a dwelling sits on up to two hectares of it, provided domestic use is not the main use overall.

Residential is not automatically out. Vacant land probably is.

Two things follow from a test built on use, and the second is the one that matters for builders.

The first surprises people. Residential property can qualify. A house used wholly and exclusively in a business meets the test.

The Australian Taxation Office has confirmed this. It adds that the property has to meet the test when the arrangement starts, and keep meeting it for the life of the loan.

Then there is vacant land.

A block of dirt is being used for nothing. It is not running a business, so it does not satisfy a test that asks how the land is used.

That is the case most likely to catch a residential builder. Not the finished investment house. The block someone bought to build on.

It is also the point almost entirely absent from the coverage, which has framed this as a change about investment property rather than a change about how land is used.

What still works

The transitional rule is more generous than most of the commentary through July suggested, and it is the part worth knowing this week.

The change does not apply to a borrowing entered into before 10 August. Those can be maintained and refinanced as normal, including with a different lender.

It also does not apply where the property was acquired under an arrangement entered into before that date. The note attached to the provision confirms this holds even where settlement happens afterwards.

ATO guidance published on 28 July puts it plainly. If a fund exchanged a binding contract before 10 August, the change does not apply.

That stays true even if the contract settles later. It stays true even if the loan itself is entered into after 10 August.

So the trigger is the binding exchange of the acquisition contract. Finance approval arriving afterwards does not break it.

There is one qualification. Later variations generally do not disturb the position. But a contract changed so heavily that its fundamental terms no longer exist may be treated as a new arrangement.

For a builder carrying jobs financed this way, that distinction sits directly on top of cash flow. A contract that holds is a job that proceeds. A contract treated as newly formed is a job whose finance pathway has closed.

Two carve outs, then none

Here is the part that has gone unreported.

The same Act made two other housing tax changes. Both were written to protect new construction.

Schedule 2 quarantines rental deductions on residential property from the 2027 to 2028 income year. It exempts new residential dwellings. Properties acquired before 7.30pm Canberra time on 12 May 2026 are also exempt, and contracts exchanged before that moment count.

Schedule 1 cuts the capital gains discount to zero from 1 July 2027, replacing it with indexation and a thirty per cent minimum tax. It preserves the full fifty per cent discount for new residential dwellings. Affordable housing keeps a discount under a separate provision.

Budget Paper 1 explains why.

At page 158, Treasury estimated those two measures would reduce supply by around 35,000 dwellings over the next decade. That is roughly a quarter of one per cent of the current dwelling stock, against up to 65,000 homes supported by the Local Infrastructure Fund.

Then it says something worth reading twice. Exempting new builds from the tax changes limits the supply impacts, and is expected to encourage investors to rebalance their portfolios towards new builds.

Schedule 5 has no equivalent. The phrase new residential dwelling does not appear in it anywhere.

A fund borrowing to build a house that does not yet exist is treated exactly like a fund borrowing to buy one that already does.

Nor has any assessment been published. No cost benefit analysis, no regulatory impact statement, no Treasury modelling of this measure. That was the position when the legislation passed in June, when no modelling was published alongside it, and it remains the position now that the measure is in force.

Treasury did publish supply modelling for the other two.

The asymmetry in the evidence base mirrors the asymmetry in the drafting.

What we actually know about the numbers

Detached housing is the only part that has been measured, and industry did the measuring.

A survey released on 20 July covered builders responsible for more than forty per cent of national detached construction.

It found 3,613 signed contracts using this kind of borrowing that had not yet started on site. Builders expected 2,415 of them, or 66.9 per cent, to be cancelled.

More than seventy per cent reported investor enquiries had already fallen. Almost ninety per cent expected detached starts to decline through 2026 and 2027.

The survey put the combined effect at a fall of between 3.5 and 5 per cent in detached commencements, and more than $450 million in state GST and stamp duty.

On Monday that figure was restated as around 2,500 contracts, described as cancelled because the administrative arrangements could not be completed in time.

That explanation sits awkwardly against the transitional rule. On the face of the Act and the ATO guidance, a binding contract exchanged before 10 August survives whether or not the paperwork was finished.

Which points somewhere else. Contracts conditional on finance that lenders had already stopped writing, rather than contracts killed by the deadline itself.

If that is what happened, the pipeline was thinning before the law arrived.

Apartments are the bigger unknown. A joint statement from three property and housing bodies on 1 July put super fund investors at a minimum of thirty per cent of apartment presales, though no methodology was published with the figure.

Presales unlock construction finance. A project that cannot clear its presale hurdle does not start, however strong the underlying demand.

Anyone following Australian construction industry trends will know that pattern. A buyer group that looks small in the lending data can still decide whether a building gets out of the ground.

The Good Builder Take

The strongest argument about this measure is not being made by anyone. It is sitting in the Act.

The government wrote a new build exemption into the negative gearing schedule. It wrote one into the capital gains schedule. Budget Paper 1 says plainly that doing so is what limits the damage to supply.

Then a third schedule in the same Act restricts a source of construction finance and says nothing about new builds at all.

That is not a claim needing anyone’s survey to prop it up. It is what the legislation says, sitting next to what the budget papers say about why the other two were written differently.

Whether super funds should be borrowing to buy housing is a real argument with serious people on both sides. Concerns about leverage in retirement savings go back more than a decade, and they did not start with this government.

But that is a different question from whether a fund borrowing to build a house should be treated the same as a fund borrowing to buy one. That narrower question has not been argued in public, and no published document addresses it.

For builders with contracts still on the books, the position is clearer than it was a month ago. A binding exchange before 10 August holds. Finance settling later does not break it.

What can break it is a variation heavy enough that the contract reads as something new. Worth knowing before anyone reopens scope on a job that has been sitting.

Frequently asked questions

Last updated: 13 August 2026. This article is general industry reporting and does not constitute legal, financial or professional guidance. Legislative references are to the Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (Act No. 49 of 2026) and the Superannuation Industry (Supervision) Act 1993 as at 13 August 2026.

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