NSW Budget Breakdown: Insights for Real Estate Investors

What you need to know

• The 2025/2026 NSW Budget introduces a suite of reforms and initiatives aimed at boosting housing supply, supporting investment, and streamlining project delivery. From pre-sale finance guarantees and tax incentives to planning reforms and workforce development, the measures are designed to address the key challenges facing the property and construction sectors.
• What does this mean for investors, developers, and industry stakeholders? These changes signal a renewed focus on collaboration, innovation, and efficiency in delivering the homes and infrastructure NSW needs for the future.

What you need to do

• Consider your project's eligibility for the Investment Delivery Authority and submit an expression of interest. 
• With land tax concessions now available indefinitely for certain BTR projects, residential real estate investors should consider whether such projects are appropriately allocated in investment strategies going forward.

Key takeaways

The 2025/2026 NSW Budget, which was handed down by the NSW Treasurer, the Hon. Daniel Mookhey MLC, on 24 June 2025, introduced a suite of reforms and initiatives aimed at boosting housing supply, supporting investment, and streamlining project delivery. From finance guarantees and tax incentives to planning reforms and workforce development, the measures are designed to address the key challenges facing the property and construction sectors.

What does this mean for investors, developers, and industry stakeholders? As a central focus of the Budget, these changes signal a renewed focus on collaboration, innovation, and efficiency in delivering the homes and infrastructure NSW needs for the future.

The Ashurst team shares key takeaways to be considered by real estate investors below.

1. Pre-Sale Finance Guarantee

The NSW Government has introduced a pre-sale finance guarantee aimed at unlocking stalled residential developments and boosting housing supply. This initiative is designed to address a common barrier faced by developers: the difficulty in securing finance when pre-sales targets are not met, and aims to give lenders greater confidence to finance projects that are otherwise viable but struggling to reach the required pre-sale thresholds.

The NSW Government has dedicated $1 billion to the program, in which it commits to purchase up to 50% of the dwellings in eligible off-the-plan residential developments, at a discount to market value on completion. To qualify for the program, developers will need to pass through the NSW Government’s credit assessment process that will consider the merits of the project and the capacity, capability and credibility of the developer and their delivery team.

This move is expected to accelerate the commencement of new housing projects, support construction jobs, and ultimately increase the availability of homes across the state.

2. Investment Delivery Authority

A significant reform in the Budget is the establishment of the Investment Delivery Authority (IDA). Inspired by the Housing Delivery Authority, $17.7 million is allocated to establish the IDA, which will act as a centralised body to expedite decision-making and provide advice to investors on how to navigate the planning system, evaluate projects for fast-track assessment and coordinate the required surrounding infrastructure. This is a positive step by the NSW Government to unlock much needed investment in major projects.

The IDA will seek expressions of interest from eligible domestic and international investment projects valued at over $1 billion, likely to include hotels, data centres, commercial developments and logistics precincts, and will come into effect in the 2025-26 financial year.

3. BTR (build-to-rent) tax reform

The Budget has delivered a boost for new build-to-rent (BTR) developments by extending the existing land tax concession indefinitely. In recognition of investors in this asset class looking for a long horizon and stable annuity-style income in their investment, the NSW Government will extend the land tax concession (of a 50 per cent reduction in assessed taxable land value for new BTR developments) to be permanent, rather than being due to expire on 31 December 2039. It appears based on announcements to date that this extension will only apply to BTR developments that first become eligible to apply for the concession for the 2026 land tax year (ie developments that are completed during and after the 2025 calendar year), and that the concession will still expire on 31 December 2039 for BTR developments that became operational prior to 2025.

In addition to the above, the existing eligibility requirement that at least 10% of total hours worked on the BTR development be worked by certain classes of workers (for example, apprentices and trainees, workers requiring upskilling, graduates, etc) will be removed, although it is not yet apparent whether the removal of this requirement will be for BTR developments that first become eligible to apply for the concession for or after the 2026 land tax year (as with the concession noted above), or all developments.

As draft legislation has not yet been released in relation to the extension of the concession or the removal of the "worker requirement", it is not yet entirely clear how these announced changes will operate.

The above initiatives are a clear sign that BTR is here to stay as part of the solution to the State's housing challenges.

4. Streamlined planning approvals

The NSW Government is implementing reforms to streamline planning approvals. These changes include a $83.4 million investment to accelerate planning approvals for large-scale market, social and affordable housing and improving the speed of planning assessment times. The goal is to make it easier and faster for developers to obtain the necessary approvals to commence construction, thereby reducing holding costs and uncertainty. By cutting red tape and improving the efficiency of the planning system, the NSW Government aims to unlock more housing supply and support economic growth.

5. "Works in kind" reform

The Budget also introduces a works-in-kind regime for key infrastructure, which allows developers to directly deliver infrastructure such as roads, parks, and community facilities, instead of paying the Housing and Productivity Contribution (where approved). The new approach seeks to provide greater flexibility and transparency, ensuring that infrastructure is delivered where and when it is needed most. The reforms are expected to encourage developers to opt for works in kind, resulting in better community outcomes and more timely delivery of essential infrastructure.

6. Investment in TAFE and skills funding

The Budget includes a significant $1.2 billion investment in TAFE training, to accelerate the delivery of 4,800 construction trades workers and in order to deliver key projects. This initiative is intended to address skills shortages in the construction sector and meet the demands of a growing pipeline of projects.

7. Modern methods of construction (MMC)

The NSW Treasurer is continuing to focus on the adoption and expansion of use of MMC as a key priority. MMC includes innovative building techniques such as modular construction, prefabrication, the use of advanced materials, and even 3D printed homes. The NSW Treasurer and Government Architect of NSW are keen to collaborate with developers on the preparation of designs.

Authors: Pauline Tan, Partner; Kate Barker, Partner; Elke Bremner, Partner; Ben Rooke, Partner; Matthew Loader, Senior Associate; Emmy Ko, Senior Associate; Daniel Richards, Senior Associate; Joanna Cao, Associate and Isabella-Elena Carrozzi, Graduate.