More than two million Australians report rental income on their tax returns, roughly five times as many as in 1980 (ATO taxation statistics, analysed by Pete Wargent). I see this trend directly, from the other side of the loan application, and the demographic details behind that number matter more for how a lender actually assesses these applications than the headline figure itself.
Most Investors Own One Property, and That Changes the Assessment
Around seven in ten individual property investors hold just one investment property (71 per cent in the ATO’s 2020–21 taxation statistics). From a lending perspective, a first investment property application looks genuinely different from a fifth — the serviceability calculation, the rental income treatment, and the risk profile all shift meaningfully once someone’s building an actual portfolio rather than holding one property alongside their own home.
Older Investors Are a Genuinely Different Assessment
Investors over 60 are now the largest age group of property investors, and their numbers have grown significantly over the past two decades (PropTrack, using ATO data). Lending to someone in this group borrowing against an existing asset base, often looking to generate retirement income rather than build long-term capital growth, involves a genuinely different serviceability conversation than lending to a 35-year-old buying their first investment property — the exit strategy and income timeline matter in ways they don’t for a younger borrower.
Rental Income Isn’t Assessed at Face Value
A common misunderstanding among newer investors is assuming their expected rental income will be counted dollar-for-dollar toward serviceability. In practice, lenders typically count only part of the rent, discounting it to allow for vacancy periods and management costs. The exact percentage depends on the lender’s policy. An investor who’s calculated their borrowing capacity based on the full advertised rent is often surprised by how much lower the actual serviceability figure comes out.
The Bottom Line
The growth in property investment across Australia is real, but the detail behind it — one-property investors, an ageing investor base, and how rental income actually gets treated — matters far more to how an application gets assessed than the overall trend itself.
Related Reading
Written by Michael Wignall, who’s spent 30+ years in banking and home lending across the ACT, Illawarra, and Riverina regions of NSW.
More on this topic is collected in the Finance Strategies for Australians.
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Written by Michael Wignall, Lending Area Manager with 30+ years in banking and home lending across the ACT, Illawarra, and Riverina. Got a question or an idea for a post? Get in touch.
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