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Should Superannuation Be Used as Mortgage Collateral?

Engine Capital — Mon, 12 Oct 2026 12:00:00 GMT

The Downfall of Bathla Group: What All Brokers Should Learn From The Collapse of Bathla Group

Engine Capital — Thu, 24 Sep 2026 12:00:00 GMT

The recent collapse of the Bathla Group has sent shockwaves throughout Australia’s property and construction industry, leaving significant uncertainty for property buyers, contractors, suppliers, employees and private lenders.

Within days of restructuring firm ‘Teneo’ being appointed as administrators, the Australian Financial Review confirmed that Bathla staff were stood down; the NSW government knocked back a request for emergency funding and thousands of clients’ homes, plus numerous businesses connected to its projects, face financial uncertainty.

What Happened to Bathla Group?

Bathla was one of the largest residential developers and builders nationally, dominant across Western Sydney and with major projects in other parts of Australia as well. However, in late August, when administrators Teneo were appointed, a “perfect storm” of financial difficulties was showcased, with over $3.2 billion in liabilities, roughly 2,000 homes mid-construction, and thousands of buyers left waiting to find out if their off-the-plan purchase will ever be finished.

Currently, Teneo is focused on understanding the Bathla group’s financial position and working out whether current construction projects can continue. Teneo has said its priority is to stabilise the business and maintain construction and settlements where possible, while limiting the disruption to employees, customers and contractors.

Voluntary administration does not automatically mean every Bathla project stops permanently, but the administrators still have to work through the assets, liabilities, funding and viability of each part of the business before any of those calls get made. That’s not a guarantee of a good outcome for any individual client, but it’s also a reason not to assume the worst outcome before the facts are in.

Not Every Bathla Client is Exposed the Same Way

Across all Bathla projects, clients are all in different stages of each project; this also reflects and highlights where each client is vulnerable in this situation. Buyers who are still at the deposit stage of an off-the-plan purchase, and haven’t yet drawn down a loan, are generally the least exposed group, even though they’re often the most anxious. Their risk sits with the deposit rather than with a loan facility, so the two things actually worth confirming are whether that deposit is held in a regulated trust account rather than paid straight to the developer, and whether the contract gives them a right to have the deposit refunded, or the contract cancelled, if the builder can’t complete.

A broker’s natural point of engagement with this group tends to come later in the process rather than earlier, so if brokers are engaged, it’s worth checking with the client’s solicitor, rather than the client, to confirm the trust and refund position is sound.

The real exposure generally shows up with construction loans. These are typically drawn down in stages as the build progresses, with the lender releasing each portion of funding as the builder completes that stage and it’s certified. When a builder stops building, the lender generally stops funding the next stage too, because there’s nothing completed to certify and release payment against. We have seen this occur with Bathla, with banks refusing to provide more funding to the development of current projects.

This situation highlights a higher exposure where a client can be left holding a loan against a partially built property, with the next drawdown frozen and no clear date to move again; this is where a broker’s involvement genuinely matters, and where the correct sequential actions are key.

It’s also worth keeping in mind clients whose property was already built and settled before the collapse. Their exposure is generally lower again as the build is finished and the loan has already settled in the normal way. It is still worthwhile for brokers to check in with their clients, as under NSW law, buyers have six years from the date of completion to claim compensation for major defects and two years for other minor defects. This process can become more complicated once the builder itself is no longer trading and unable to fulfil any defect maintenance.

Why Brokers Are Exposed Here, Not Just Clients

Currently, Bathla clients are filled with a lot of uncertainty surrounding the unknown status of the Bathla Group. That’s an uncomfortable position for any broker and a genuinely risky one if you don’t have all the answers. When a builder collapses, the first phone call from a client rarely goes to the administrator, but to the most accessible contact, usually a broker:

“What does this mean for my loan?”
“Do I still have to settle?”
“I’ve paid my deposit… is it gone?”
“The builder isn’t answering. What should I do?”

Clients experiencing financial stress or confusion tend to direct it to the most accessible person attached to the deal; that’s usually the broker, not the developer and not the administrators. This means the first conversation you have with an affected client matters more than almost anything else. So how do you approach this?

As a broker, when a client tells you their developer has collapsed, there’s a natural instinct to call the client back immediately with answers. Resist from this until you’ve gathered all the necessary information generally, not the other way around. You want to be the broker who says “here’s what I know and here’s what happens next,” not the broker who has to ring back an hour later with updates.

While collecting information, it’s important to be updated on the current status of the client’s purchase and whether the current progress draw has been paid out or is in the lender’s hands, whether the facility is in default or just on hold, and whether the lender has a documented position on builders in administration generally. Lenders that deal in construction finance regularly will often have a bulletin or a dedicated contact for exactly this situation; be sure to ask for it. If your lender doesn’t have a clear answer yet, that’s useful information too! It tells you the honest answer to give your client is “we don’t know yet,” rather than manufacturing false certainty.

It also helps to be able to tell the client, honestly, that their outcome isn’t necessarily the same as every other Bathla buyer’s. The administration process works development by development, so one project may keep moving while another is on hold. A client who understands this is less likely to panic based on a media headline about the group as a whole, and more likely to wait for an official update that’s actually specific to their build.

Also encourage your clients to keep every piece of paperwork, including the contract, any correspondence, and receipts for deposits and payments.

There Are Also A Few Things You Should NOT Say to Your Clients

When your client is stressed and uncertain regarding the status of their build, it’s inevitable that there will be questions that you won’t have the answer to. It’s essential to avoid the following:

Don’t speculate or promise timelines: You don’t have all the information, and administrators themselves often don’t have a firm answer in the early days. “I don’t know yet, and here’s how we’ll find out” is a complete and reassuring way of ensuring that you will try to find all the information for your client and have their best interest at the forefront .
Don’t offer opinions on the builder’s, developer’s, or administrator’s conduct: It’s tempting to commiserate by saying what you really think of the people involved. Keep it factual and forward-looking.
Don’t tell the client what their legal rights are: Refer them to their solicitor. Even an accurate general statement, given without full knowledge of their specific contract, can be read back later as advice you weren’t qualified or engaged to give.
Don’t go silent: The single biggest driver of complaints in situations like this isn’t bad news… It’s no news. A short update saying “still waiting on the advice from administrators, I will call you Thursday with an update” costs you two minutes and prevents a lot of anxiety-driven escalation.

Five Questions That Would Have Flagged Bathla Group

Developer implosions are rarely a surprise for people who know where to look. A short due-diligence process at the beginning of a deal won’t catch every failure, but it catches more than what most brokers currently check for. Here are the essential questions to implement into your process:

How is the builder funded, and by who?
Bathla’s collapse followed heavy reliance on private credit. Investigations into reporting procedures following the collapse pointed to private credit funds limiting investor redemptions as pressure built. Traditionally, screening questions revolve around bank versus private lender, whether the borrower actually understands what they’re paying, what security has been given, and whether the business can survive a run of weaker sales on those terms. However, a builder funded predominantly through private credit rather than mainstream bank facilities isn’t automatically a red flag, but it’s a different risk profile; Facilities can tighten or be pulled faster than a bank one, with less public visibility until it happens. Instead, ask how the builder’s own funding is structured, and how concentrated it is with a small number of lenders.
What does the pipeline-to-delivery ratio look like?
A developer with tens of thousands of dwellings in its “pipeline” against a few thousand actually under construction is signalling growth ambition, but it’s also a business that needs continuous sales and continuous credit to keep moving. When sales soften, an organisation built for that pace of growth has less room to absorb the shock than one running a smaller and more conservative book.
How exposed is the builder to a single market segment or region? A builder concentrated heavily in one price point or one region carries concentrated risk. A downturn in that specific segment hits the whole business at once, rather than being absorbed across a diversified project book.
What’s the builder’s public commentary in the last six to twelve months? Founders and executives talking publicly about “challenging conditions,” cost pressure, or policy changes affecting the business are often signalling something the financials will confirm later. It’s not proof of anything on its own, but combined with the other checks, it’s a data point worth noting rather than dismissing as ordinary industry noise.
Is the builder’s home warranty insurance current and specific to this project? This is the one that actually protects your client if the worst happens, so confirm it directly rather than assuming it exists because the contract references it.

The Bottom Line

A developer collapse isn’t a broker failure. But how the next few weeks are handled will showcase a lot about the brokers chosen by the impacted clients. A disciplined line on what you will and won’t opine on, and a consistent process of documentation will get most brokers through similar situations cleanly.

The Property Market Has Hit a Turning Point: What Every Mortgage Broker Needs to Know

Engine Capital — Fri, 21 Aug 2026 12:00:00 GMT

Beyond the Budget: What the Budget Really Means for Property, Negative Gearing and CGT

Engine Capital — Mon, 13 Jul 2026 12:00:00 GMT

A month on from the announcement of the 2026 Budget, the headlines have largely subsided; however, the implications for the property market remain firmly in focus. In this year’s budget, Treasurer Jim Chalmers handed down what no government has proposed since the 1980s: scaling back negative gearing on residential investment properties and fundamentally phasing out the 50 per cent capital gains tax (CGT) discount on investments.

Now that the political noise has settled, attention has shifted to the questions of what ‘actually’ matters to investors, brokers and lenders alike; Beyond the immediate reactions and predictions that dominated Budget week, what is the real direction the property market is heading? Not the directions forecasted in the heat of Budget week, but what the direction is signalled by the structure of these newly announced reforms.

What actually changed?

Setting aside the headlines, there are two main reforms at the core of the budget package:

Negative Gearing

Negative Gearing on residential property is being limited to new builds from 1 July 2027. Established investment properties purchased after 7:30pm on Budget night (12 May 2026) will have their rental losses “quarantined”, deductible only against other residential property income or future property capital gains, but not against wages or business income. Anything held (or under contract) before Budget night is ‘grandfathered’ until sold.

50% Capital Gains Tax

The 50 per cent CGT discount for individuals and trusts is being replaced from 1 July 2027 with cost base indexation, adjustments to purchase price for inflation, alongside a minimum 30 per cent tax rate on gains. Critically, the change only applies to gains occurring after 1 July 2027. Growth banked before that date keeps the old 50 per cent treatment, with valuations setting the dividing line.

Alongside these reforms are a number of notable exemptions. New builds keep both negative gearing and the choice of old or new CGT treatment, while build-to-rent developments, widely held trusts and superannuation funds are exempt. The package is further supported by a $2 billion ‘Local Infrastructure Fund’ and an extension of the ban on foreign purchases of established dwellings.

Back to the Future

What much of the commentary has overlooked is that these reforms are far from unprecedented. In many respects, they represent a return to earlier policy settings rather than a fundamental departure from them.

Indexation of the cost base was part of Australia’s original capital gains tax (CGT) design when introduced by Paul Keating in 1985. That framework remained in place for 14 years before the Howard Government replaced it with the 50% CGT discount in 1999.

Negative gearing has followed a similar trajectory. In 1985, the Keating Government quarantined rental losses, only to reverse the policy in 1987 amid concerns about a rental crisis. Subsequent analysis, however, suggested that pressure was largely concentrated in markets such as Sydney and Perth, where vacancy rates were already tight prior to the change.

Viewed in this context, the 2026 Budget is less a structural break than a partial restoration of the policy environment that existed between 1985 and 1999. The legacy of the 1987 reversal, combined with the political sensitivity of debates in 2016 and 2019, helps explain why it has taken decades and a carefully grandfathered design to revisit these settings.

International experience reinforces this pattern. The United States effectively curtailed negative gearing for passive investors under the Tax Reform Act of 1986, while still supporting a large and liquid rental market. In the United Kingdom, reforms between 2017 and 2020 progressively removed mortgage interest deductibility for landlords, replacing it with a basic-rate tax credit and driving a shift toward corporate structures rather than market disruption.

New Zealand offers the closest parallel. In 2021, it removed interest deductibility for existing residential properties while exempting new builds, closely mirroring Australia’s approach. Within three years, however, elements of the policy were being reversed following a change in government. The lesson is clear: such reforms can be absorbed by markets, but their long-term durability ultimately depends on political support.

What Nobody is Talking About: The Lock-In Effect

Most analysis has focused on how the changes affect demand. However, the more interesting question relates to what grandfathering does to supply.

Every established investment property held before Budget night retains access to negative gearing, but only until it is sold. This creates a strong incentive for thousands of existing investors to hold rather than transact, as selling would mean forfeiting their tax position that cannot be regained. Economists refer to this as the ‘lock-in effect’; it points to fewer established listings, lower turnover, and somewhat counterintuitively potential price support for existing stock, even as new investor demand for it weakens. The doomsday scenario of grandfathered investors rushing for the exits gets the incentive exactly backwards: the rational move is to never sell.

A more subtle shift also worth noting is reforms directed squarely at residential property. Commercial real estate assets such as office, industrial, retail, and mixed-use remain unaffected. Investors can still fully offset losses on commercial assets against other income, and SMSF and widely held trust structures sit outside the new rules entirely. On a relative basis, the tax treatment of commercial property has effectively improved without any explicit policy change, and capital tends to respond to such relative shifts. Together with the institutional exemptions, the package subtly redirects property investment toward two areas: new residential supply and commercial assets, both of which sit more naturally within business-purpose lending than the traditional mum-and-dad established housing market.

The Other Side Of The Coin

None of this is to say that headlining arguments against the reforms lack substance. Commonwealth Bank of Australia economists now expect national home prices to be broadly flat in 2026, with the tax changes amplifying a slowdown that is already underway. Auction clearance rates have softened since the Budget, days on market are increasing, and new investor lending is forecasted to fall to roughly half of late 2025 levels. Their modelling suggests established prices could sit around 3 per cent below where they would otherwise have been, with modest upward pressure on rents over time as the pipeline of investor activity in existing stock diminishes.

Negative gearing currently costs the budget around $11 billion per year in foregone revenue, and removing a subsidy of that magnitude from a segment of the market is far from costless. The new-build exemption also runs into an important constraint; construction costs have risen by 30 to 40 per cent since 2021, and a tax concession alone does not render an otherwise unviable project feasible.

The shift to indexation also embeds a more subtle assumption about inflation. At 2.5 per cent inflation, investors would need to hold assets for many years before indexation matches the value of the previous 50 per cent CGT discount. As a result, shorter hold, higher-growth strategies are the most exposed under the new reforms.

What to monitor Post-Budget

Looking forward, there are four key areas to monitor following the budget:

The Senate

The package passed the House on 4 June, but amendments in the Senate chamber could still soften the edges.

Transaction pulse before 1 July 2027

Investors who want established property under the old negative gearing rules have a closing window, and new build buyers have every reason to act while both regimes remain open to them.

The slow rotation of capital

Toward new supply, build-to-rent, commercial assets, and yield-driven (rather than tax-driven) strategies- where positive cash flow is about to become the default underwriting standard, not the exception.

The political cycle

New Zealand reminds us that what one government legislates, the next can unwind. For lenders and brokers, the directional move is clear enough. The era of the tax-subsidised, loss-making established rental is closing. The era of cash-flow discipline, new supply and business-purpose credit is opening. Markets reprice around tax settings; they always have! But they rarely stop moving.

The Opportunity Ahead

As traditional property investment settings continue to evolve, we expect many investors will reassess where they seek income, diversification, and exposure to real assets. With the CGT discount being wound back and negative gearing restrictions on established property, the after-tax appeal of direct property investment is likely to shift.

In this environment, the opportunity is not simply in the policy change itself, but in how capital responds to it. The next phase of growth will increasingly favour those positioned to support, fund, and deliver the housing supply Australia needs.

If your clients are seeking clarity on how these changes may impact their borrowing or investment strategy, our team is here to help assess the implications and identify lending solutions aligned with their goals.

Australia’s $11.6 Trillion Housing Market: Prosperity or Precarious Bubble?

Engine Capital — Mon, 22 Sep 2025 12:00:00 GMT

Australia’s housing market has reached an extraordinary milestone: a valuation of more than $11.6 trillion AUD, making it five times larger than the nation’s annual GDP. On a per capita basis, this equates to roughly $440,000 of housing wealth per resident, a staggering figure when compared internationally.

For perspective, the United States’ housing stock is valued at about 1.6 times GDP, while the UK sits closer to 3.5 times GDP. On price-per-square-metre metrics, Australia consistently ranks among the world’s least affordable markets, with Sydney and Melbourne often featured alongside Hong Kong and London in global affordability indexes. For first-home buyers, the median house price-to-income ratio now exceeds 8.5—well above the “severely unaffordable” threshold of 5 set by Demographia’s long-standing global housing affordability survey. In this context, even as interest rate cuts in 2025 have begun to lift demand, the sheer size and cost of Australia’s housing market has reignited debates about sustainability and accessibility.

How did we get here?

The path to today’s A$11.6 trillion market has been anything but smooth. For much of the 20th century, Australian house prices broadly tracked inflation, with little real growth. The real turning point arrived in the late 1980s and 1990s as financial deregulation, dual-income households, and generous tax incentives fuelled borrowing capacity and investor demand. Since then, house prices have risen at an average of around 6% per year, punctuated by brief corrections such as the early-1990s recession, the 2008–09 global financial crisis, and the RBA’s sharp rate hikes in 2022–23. Yet each downturn proved temporary, with prices rebounding quickly on the back of tight supply, steady migration, and falling global interest rates.

Are we alone?

Australia is not unique in this trajectory—Canada, Switzerland, and the UK share similar patterns—but the magnitude of its valuation relative to GDP stands out globally and prompts deeper questions: is Australia experiencing a housing bubble, or is this the natural by-product of structural scarcity and global capital flows? Unlike countries with abundant new housing supply, Australia’s population growth—fuelled by migration and urban concentration—collides with restrictive planning systems and costly infrastructure bottlenecks. This supply-demand imbalance helps explain why valuations keep climbing despite periodic slowdowns. Critics warn of unsustainability, citing parallels with Japan’s late-1980s real estate bubble or the US housing crash of 2008, both of which were preceded by sharp spikes in property-to-GDP ratios. Yet other markets, such as Switzerland and parts of Canada, have shown that extremely high real estate valuations can persist for decades, supported by stable institutions, consistent immigration, and deep pools of global capital seeking secure assets. For Australia, the current trajectory appears both a blessing and a curse: housing wealth underpins household consumption and retirement security but also amplifies inequality and financial fragility.

A debt story

On the debt side, Australia’s households are among the most indebted in the world, with debt-to-income ratios consistently hovering around 180–190%—second only to a handful of European nations. This leverage makes Australians particularly sensitive to interest rate changes, as demonstrated during the 2022–24 tightening cycle, which pushed nearly one-third of borrowers into mortgage stress. The 2025 rate cuts have provided temporary relief, but the underlying fragility remains. Liquidity dynamics are also critical: Australia’s housing boom has been sustained in part by global capital chasing yield in a low-interest environment, including superannuation funds, offshore investors, and securitisation markets. Longer life expectancy and later retirement have also normalised longer mortgage terms—stretching beyond 30 years in some cases—effectively supporting higher debt loads and justifying elevated property values. Still, the system remains exposed: a sharp contraction in global liquidity or another cycle of rapid rate hikes could test the resilience of households and banks alike.

Can it be sustained?

Looking ahead, the future of Australia’s A$11.6 trillion housing market will be defined by a delicate balance between structural demand, policy interventions, and global economic conditions. On one hand, continued population growth, infrastructure investment, and capital inflows suggest that high valuations could persist, cementing property as the cornerstone of national wealth. On the other, affordability pressures, record leverage, and historical precedents highlight the risk of a correction if supply finally catches up or if external shocks undermine confidence. Government initiatives—such as shared equity schemes, first-home buyer support, and planning reforms—may provide some relief, but without deeper supply-side measures, their long-term impact is limited. For now, Australia’s housing market remains both a symbol of prosperity and a looming source of vulnerability: a multi-trillion-dollar asset base that could either anchor long-term stability or, if mishandled, become the nation’s greatest financial risk.