Investor Sam Coert was told her borrowing power had changed after she had already bought a home. Picture: Jeremy Piper
A Sydney woman who recently signed contracts for a home purchase has revealed her horror after learning she could no longer get a loan for the property she was now committed to buy due to recent tax changes.
Investor Sam Coert said what followed was a nasty turn of events that saw her forced to surrender the holding deposit she had just paid and stake a desperate scramble to get out of the deal she had only just signed.
The exercise entrepreneur in Sydney’s south had thought she was well on her way to expanding her property portfolio, having pulled out equity from a previous investment in Perth to fund her upfront costs.
Working alongside a buyer’s agent, Ms Coert selected a house in the northern Melbourne suburb of Craigieburn, signed the contract, and spent over $1000 on a holding deposit.
But just as she celebrated the purchase, the government announced a range of tax changes in the May federal budget, including restrictions on negative gearing.
The tax benefit allows investors to offset losses on their investment against their taxable income, with anyone who purchased established homes after budget night set to lose the benefit from July 2027.
The change instantly sent shockwaves through the banking sector, with banks immediately factoring in the loss of negative gearing into their assessments of investors’ borrowing power.
Ms Coert was told her previous pre-approval for loans, which included for two purchases of up to $700,000 each, would be walked back and she could now only get a loan for one property up to $450,000.
“I had just signed a contract for the first one, and then they had the changes with the budget. The week after, the bank interest rate changed,” Ms Coert explained.
“I didn’t realise the loan itself hadn’t been finalised at this stage. I was then told I couldn’t have the property. I could only buy one home up to $450,000.
“Still today, it doesn’t make sense. I hadn’t been planning to be negatively geared … How did I go from being able to buy two, to one?
Treasurer Jim Chalmers announced the negative gearing changes with the May federal budget. Picture: Hilary Wardhaugh
“I had no idea the government moves would reduce my borrowing power. Even more, my broker didn’t say anything.”
Ms Coert said her broker and buyers agents helped her get out of the deal and she had to accept a loss on the previous deal.
Having already accessed equity from her Perth investment, Ms Coert felt obligated to proceed with a purchase despite the reality check.
Her buyer’s agent redirected her from houses in Craigieburn to apartments in St Kilda and Caulfield. She eventually signed a contract for a Caulfield unit expected to be neutral to positively geared.
Ms Coert said she moved her search to the St Kilda area.
She is happy with her new investment but remains frustrated. “I may just buy shares next time,” she said.
Buyer’s agent James Thompson of Rethink Residential warned that Ms Coert’s contract shock is part of a broader fallout affecting would-be landlords across the nation.
He disclosed that major lenders immediately factored the loss of negative gearing tax benefits into borrowing capacity assessments, catching investor buyers unprepared.
It was common to see investors who lost as much as 40 per cent of their borrowing power, Mr Thompson noted.
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“That’s pushed many totally out of the market, or if they are buying, it’s in cheap regional areas,” he said.
Mr Thompson added that the uncertainty of the budget changes were “killing” many investors’ desire to purchase investment properties.
“In the past, when you had things like higher interest rates, buyers could adjust. But when they’re unsure about what’s going to happen, investors don’t want to enter the market.”