Not all investment properties borrow the same way.
A two-bedroom unit in an established block will attract different serviceability calculations, deposit requirements and rental yield assumptions from lenders compared to a house and land package or a strata townhouse. If you work as a pharmacy manager and you're weighing up which property type suits your income pattern and growth strategy, understanding how lenders assess each option will determine what you can borrow and how the numbers play out over time.
How Lenders Assess Apartments and Units
Lenders discount projected rental income more heavily for units than for detached houses. Most banks apply a rental income haircut of 20 per cent for serviceability, but some lenders increase that to 30 per cent or cap the total number of units in your portfolio if the block exceeds a certain floor count or if the lot size falls below 50 square metres. A one-bedroom apartment yielding $450 per week might be treated as $315 per week for borrowing capacity purposes, which directly affects how much you can borrow against it and any subsequent property.
In our experience, pharmacy managers often underestimate the impact of body corporate fees on serviceability. A unit returning $23,400 annually in rent but carrying $4,000 in quarterly strata levies leaves significantly less net income than headline yield suggests. Lenders include those fees in their expense calculations, and if the body corporate has flagged major works or holds a low sinking fund balance, some lenders will decline the security altogether. If you're considering an apartment as your first holding, confirm the body corporate financials and any planned capital works before you apply, not after you've paid a building inspection.
Houses on Standard Residential Lots
A detached house on a lot of 300 square metres or more will generally meet every lender's security profile without additional scrutiny. Rental income is typically shaded by 20 per cent for serviceability, and vacancy assumptions sit at around 4 per cent annually. If you're purchasing in an area with consistent tenant demand and low turnover, a house gives you the widest choice of lenders and the most flexibility to refinance or leverage equity as the property appreciates.
Consider a pharmacy manager purchasing a three-bedroom house on a suburban lot as a first investment property. Rental income covers most of the interest, council rates and insurance, but not all of it. Under current negative gearing rules that remain in place until 30 June 2027, the shortfall can be offset against salary. From 1 July 2027, if the property was acquired after 7:30pm AEST on 12 May 2026, that loss can only be quarantined against future rental income or capital gains unless the dwelling qualifies as an eligible new build. The difference between an established house and a new one acquired after that date becomes material when you run the after-tax cash flow over the first few years.
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Townhouses and Villas in Strata Schemes
A strata townhouse sits between a unit and a detached house in how lenders treat it. Most lenders accept strata titled houses without the same restrictions applied to high-density units, provided the complex is under three storeys and the individual lot includes some exclusive-use land. Rental yields tend to be slightly lower than units but higher than standalone houses in the same suburb, and body corporate fees are typically lower than apartment blocks.
Serviceability is calculated with the same rental income discount as a detached house, but some lenders become cautious if the total number of lots in the complex exceeds 100 or if there are commercial tenancies mixed into the scheme. If you're looking at a townhouse development with shared facilities such as a pool or gym, check whether the body corporate levies include a proportion allocated to commercial areas, because that can trigger a lender policy exclusion even if the dwelling itself is purely residential.
Vacant Land and House and Land Packages
Vacant land does not generate rental income, so lenders will not include any offset when calculating serviceability. You carry the full holding cost of the land loan, including interest, council rates and any land tax liability, until construction begins. If you're financing land with the intention to build, most lenders will roll the land loan and construction facility into a single approval, but the land component must be serviced from your salary alone until the dwelling is complete and tenanted.
A house and land package purchased off the plan can qualify as an eligible new build for ongoing negative gearing under the new rules, provided the package meets the definition of a dwelling constructed on previously vacant land and settlement occurs after the announced date. If you're purchasing a package where construction has already commenced or where the developer has titled the land separately before sale, confirm the timing and structure with both the developer and a tax specialist before contracts are exchanged. The difference between quarantined losses and deductible losses will materially affect cash flow from the first year of ownership.
Properties Requiring Major Renovation
A property requiring structural repair or major renovation is typically valued by lenders on an 'as is' basis, not on the improved value you plan to achieve. If the dwelling is not habitable, it will not generate rental income, and lenders will not offset any projected rent in their serviceability calculation until the works are complete and the property is re-valued. Some lenders exclude properties requiring more than cosmetic work altogether, particularly if the renovation includes changes to the building footprint or requires council approval.
If your strategy involves purchasing a dated property below median price, renovating it over six to twelve months, and then refinancing to release equity for the next purchase, you'll need to structure the initial loan to cover both the purchase and at least part of the renovation cost upfront. Construction loans are one option, but most lenders cap the renovation component at 10 to 15 per cent of the purchase price unless the works are formally contracted and independently valued.
New Builds and Off-the-Plan Purchases from 1 July 2027
An eligible new residential dwelling purchased after 7:30pm AEST on 12 May 2026 retains access to negative gearing and can elect between the existing 50 per cent capital gains tax discount or cost base indexation with a 30 per cent minimum tax rate on real gains. The definition is strict. The property must be constructed on previously vacant land, or it must replace an existing dwelling where the total number of dwellings increases. A knock-down rebuild that results in the same number of dwellings does not qualify, and a new build that has been occupied for more than 12 months before you purchase it loses the concession.
If you're buying off the plan and settlement is expected after 1 July 2027, the contract date, the commencement of construction, and the date of first occupancy all matter. A unit in a newly completed block that was used as a display suite for 18 months will not meet the test. The ATO has indicated it will rely on utility connection dates and council records to determine first occupancy, so the sales contract and developer warranties should explicitly confirm the dwelling has not been previously occupied if access to these concessions is part of your purchasing decision.
Which Property Type Suits Pharmacy Manager Income and Hours
Pharmacy managers typically have stable employment income and rostered hours that don't fluctuate week to week, which lenders view favourably for investment borrowing. Your income structure allows you to service higher debt levels than contractors or locum pharmacists with variable earnings, but it also means you're more exposed to serviceability changes if interest rates or APRA policy settings shift.
A property that requires constant tenant management or frequent maintenance will compete with your working hours in a way that a newer, lower-maintenance dwelling will not. A brand-new townhouse in a managed complex will have minimal call-out costs in the first few years and is more likely to hold a tenant for a longer lease term compared to an older unit requiring periodic appliance replacement. If your intention is to build a portfolio rather than manage a renovation project, prioritising tenant stability and low-maintenance stock will give you more capacity to add a second or third property without the holding costs eroding your borrowing buffer.
Call one of our team or book an appointment at a time that works for you. We access investment loan options from lenders across Australia and can walk through the serviceability, deposit and tax treatment for the specific property type you're considering, including how the new negative gearing and capital gains rules apply to your timeline and purchasing structure.
Frequently Asked Questions
Can I still negatively gear an investment property purchased after 12 May 2026?
Yes, but only if the property qualifies as an eligible new build, meaning it was constructed on previously vacant land or replaced an existing property with an increase in dwelling numbers. Established properties purchased after that date will have rental losses quarantined from 1 July 2027 and can only offset those losses against rental income or future capital gains.
How do lenders treat rental income from units differently to houses?
Lenders typically discount rental income by 20 per cent for houses, but may increase that to 30 per cent for units, particularly if the apartment is in a high-rise block or has a small floor area. Some lenders also cap the number of units you can hold in a portfolio or exclude certain building types from their security policy.
What happens if I buy vacant land to build an investment property?
Vacant land generates no rental income, so lenders calculate serviceability based on your salary alone until the dwelling is complete and tenanted. Most lenders will approve a combined land and construction facility, but you carry the full holding cost of the land loan, including interest and rates, until the build finishes.
Does a house and land package qualify for negative gearing under the new rules?
A house and land package can qualify as an eligible new build if it meets the definition of a dwelling constructed on previously vacant land and settlement occurs after 7:30pm AEST on 12 May 2026. Confirm the contract timing and structure with a tax specialist before proceeding, as the rules are strict and the ATO relies on occupancy records to determine eligibility.
Why do lenders care about body corporate fees for units?
Body corporate fees reduce net rental income and are included in lender expense calculations for serviceability. If the body corporate has flagged major works, holds a low sinking fund balance, or the levies are high relative to rent, some lenders will either reduce borrowing capacity or decline the security altogether.
