Is being a landlord still worth it?

As a refresher on the new legislation:

• Properties held before 7:30pm AEST on 12 May 2026 (Budget night) retain their existing negative-gearing treatment;
• From 1 July 2027, investors in established property bought after that time cannot offset excess rental losses against wages, although losses can be used against residential-property income and carried forward;
• Eligible new builds retain negative gearing against other income;
• For gains accruing from 1 July 2027, indexation replaces the 50 per cent capital gains tax discount and a 30 per cent minimum rate generally applies, while eligible new builds can choose between the old and new capital gains tax treatments; and
• From 10 August 2026, SMSFs will no longer be able to utilise limited recourse borrowing arrangements (LRBAs) for non-business real property (this is not quite as straightforward as residential versus commercial).

The takeaway definitely makes intuitive sense: the government announces measures to make property investing less attractive, then auction clearance rates tumble and median house prices cool off.

Reality is a bit more complicated. 

The tide had already begun to turn prior to Budget night, as evidenced in real estate analytics firm Cotality’s May numbers showing that prices in Sydney had fallen 2.1% from their highs in November 2025 and Melbourne down 2.9%. The skyrocketing growth in cities like Brisbane, Adelaide and Perth had also slowed.

Factors like rate hikes, cost of living pressures and depressed confidence among buyers have all played a role. But there’s no doubt the budget measures are changing the calculus for investors and pushing prices lower.

As the table above shows, even with all of the headwinds facing residential property prices, the median dwelling price nationally is up 5.3% year-on-year. 

In terms of investment volatility, things could be much worse. But investors will be much less worried about the past performance of property prices than the outlook going forward.

To quote Janet Jackson: "What have you done for me lately?"

The problem, according to Spectrum Wealth Partners CEO Ashley Tilston, is that many investors are still making decisions based on conditions that no longer exist.

"The Australian faith in property is older than the tax breaks," Tilston says. 

"The idea that property doubles every 10 years predates the capital gains tax discount introduced in 1999. This was never merely a tax play. It is bound up in the Australian dream of land ownership and the promise of security."

The rules have changed, the mythology hasn't

Something that can be missed in the analysis of property as an investment is the feeling of security that it provides. Unlike shares, ETFs, bonds, or any other intangible asset, you can stand inside the property.

"That feeling is legitimate. Anyone who dismisses it as irrational has probably never sat across from a family deciding where to put its life savings," Tilston says.

"Start with an asset people already trusted. Add a powerful tax advantage. Then add the aftermath of the global financial crisis: households watched equities fall sharply while interest rates were cut to extraordinary lows. Cheap money flowed towards the asset that felt safe, solid and familiar. Property rewarded those who made the leap.

"Put it together – trust, favourable tax treatment, cheap credit and a generation wary of shares – and you get an exceptional period. Many Australians came to regard that period as a law of nature. Property doubles every 10 years. It always goes up. Safe as houses."

Now that conditions have changed and the tailwinds no longer line up in the same way, the financial case for property isn't as compelling. 

The psychological pull is another story. According to Tilston, the question of whether or not to invest in property should now be: is being a landlord actually worth it?

"For some people, the answer remains yes. For many others, the numbers are far less convincing than the mythology."

To illustrate just how wide the gap between the mythology and the arithmetic can be, below we look at three real-life case studies.

Does right to buy mean right to keep?

In the first example, a retired client held an investment property for 15 years, had no debt against it, and it delivered capital growth of around 4% per year in nominal terms. She also kept the rent below market rate for a long-term tenant because she “valued the relationship and did not feel the need to squeeze every last dollar from the property”.

Charging less in rent may sound like it’s going to be the problem in this scenario, but it wasn’t until the original tenant moved out and the landlord was charging market rates that cash flow became an issue.

“Since then, there has been a repair request roughly once a month. Nothing catastrophic. Just the steady drip of maintenance that can turn an investment property into a second job with irregular pay,” Tilston says.

“The important point is not that the property failed. It did not. It compounded over 15 years, built substantial equity and did what she bought it to do. But an investment that was right to buy is not automatically right to keep.”

Running the numbers going forward and the net income was going to be comparable to a term deposit. The costs associated with selling and the CGT bill all needed to be weighed, but the financial advantage was no longer enough to outweigh the administration and uncertainty.

“The investment did its job. The question is whether the next year of ownership still has a job to do.”

Repairs and strata

Drawing on his own experience of buying an off-the-plan apartment with his wife when they were young and “getting hammered at auction after auction”, Tilston got lucky with a solid build that held up well. When they traded up for a house and kept the apartment as an investment, the next week the dishwasher died and had to be replaced.

“That happens. Appliances fail. But it happened in week one, and it was the first of a line of costs that had never featured prominently in the original forecast,” he says.

“Around the same time, the strata levy rose from $1,600 a quarter to $2,400 because the building was sensibly building its capital-works fund. It was good governance. It was also money we were paying today for work we were unlikely to see because the apartment was always going to be sold to help fund our next home.

“When we added it all up – good tenants, no defects, no disaster and real capital growth – the annualised return was about 5.2%. A broad exchange-traded fund would have produced a higher return over the same period, without the dishwasher or the strata meetings.”

Being a landlord is not passive

The third example is a couple in their late 40s with three children looking to build more wealth that used a buyer's agent to purchase an investment property in Far North Queensland, effectively fully debt-funded on an interest-only loan.

“The investment case presented to them assumed roughly 30% capital growth over three years. Their buyer's agent now estimates that the property has risen by about 12%,” Tilston explains.

“On paper, it appears to be working. Inside the family budget, it feels very different. Interest costs rose. The air-conditioning needed replacing. So did a deteriorating fence. The tenants then asked for additional fans and new carpet – work the owners were not required to approve – and the couple declined because there was no room left in the cash flow.”

“Perhaps it can; perhaps it cannot. But the tenant is not responsible for making the investment thesis work,” Tilston says.

“These clients are not villains. They are an ordinary family trying to improve their future. They are also discovering something that receives remarkably little attention when property is sold as a wealth strategy: being a landlord is not passive.”

So, is being a landlord worth it?

A well-bought property with sustainable debt, a genuine cash buffer, attractive net yield and a broad future buyer pool can still do valuable work and grandfathered holdings may continue to stack up. Some investors are genuinely comfortable with the administration, concentration and illiquidity that comes with direct property ownership.

“But the answer should no longer be automatic,” Tilston argues.

“Do not assess the property according to what you paid for it or what it has done in the past. Assess it using the capital tied up in it today and the return you reasonably expect from here. Count the net rent, interest, property management, insurance, rates, land tax, strata, maintenance, vacancy, selling costs and tax. Then use a capital-growth assumption you would be prepared to defend if it did not arrive.”

The final step is the one most investors skip: comparing that forward return with the alternatives available today, not the alternatives that existed when the property was purchased.

“The question is not whether property made money under the old rules. It is whether the next year of being a landlord is worth what it will ask of you.”