NSW unlocks housing projects with $1 billion developer guarantee
Written by David Lovato – CPC Lending Solutions
July 2025
The New South Wales government’s 2025–26 state budget has given a significant boost to residential property development by announcing a $1 billion Pre-Sale Finance Guarantee scheme.
This initiative aims to unlock stalled housing projects across the state by helping developers secure finance earlier, speeding up construction and increasing housing supply.
Financing bottleneck
This scheme, an Australian first, addresses a critical bottleneck that has plagued developers: the strict pre-sale requirements imposed by traditional lenders.
Traditionally, banks and lenders require developers to pre-sell between 50% and 80% of dwellings in a project to qualify for loans. This high pre-sale threshold has been a major hurdle, particularly for medium-density developments and apartment projects, often causing delays or indefinite stalling of many approved housing developments.
In fact, recent research by SuburbTrends, commissioned by MCG Quantity Surveyors, revealed that one in six approved unit projects around the country fail to get built. This results in “phantom towers” – approved projects that remain unbuilt for years, contributing to the state’s housing shortage.
The new Pre-Sale Finance Guarantee scheme aims to tackle this obstacle between approvals and construction.
How the scheme will work
Developers who have secured planning approval and have lender terms that require pre-sales to commence construction, can apply for the guarantee.
In it, the government will act as guarantor for up to 50% of eligible off-the-plan housing projects, providing between $5 million and $50 million per development.
Once approved, construction must begin within six months. If the project’s dwellings sell out as planned, the government’s guarantee is dissolved, and the funds are recycled back into the scheme for other projects.
But if homes are not sold, the developer can call on the guarantee, selling the unsold homes to the government at a discounted rate (at a minimum of 10% of the market value). The government can then sell, rent or convert them into affordable or social housing, ensuring that some form of housing supply is delivered regardless.
To qualify for the program, developers will need to undergo the state government’s credit assessment process. This will take into account the merits of the project and the capacity, capability and credibility of the developer and their delivery team.
Developers will pay an application fee to have your project assessed. If successful, you will also be charged a line fee for the duration of the government’s financial exposure.
This line fee is similar to the interest you’d pay on a loan facility. It’s calculated as a percentage of the amount the government is guaranteeing and reflects the cost of having that financial backing in place. The exact rate will be pre-determined and applied annually until the guarantee is extinguished.
The scheme is expected to come online later this year, with initial applications anticipated to be accepted from October 2025.
The fund will support up to 5,000 apartments, which is projected to unlock the construction of 15,000 new homes over the next five years.
Other budget announcements
In addition to the Pre-Sale Finance Guarantee scheme, the NSW government announced several other initiatives aimed at improving housing supply:
- Permanent build-to-rent tax concession: A 50% reduction in land value for eligible projects will now apply indefinitely, encouraging more high-quality rental developments. This concession was previously due to end in 2039.
- Works-in-Kind credit: An offset will be available for approved infrastructure costs, such as roads or land for schools, against the Housing and Productivity Contribution.
- $145.1 million for Building Commission NSW: A funding boost will support stronger regulation, more inspections and improved construction quality.
- $3.4 billion skills investment: This investment will train over 23,000 new construction apprentices and offer up to 90,000 fee-free training places.
- $122 million to streamline planning approvals: This aims to increase planning resources, support infrastructure delivery and accelerate housing approvals.
CPC Lending Solutions is a property development and residential finance specialist. Whether you’re a developer needing funding for land, construction, or residual stock, or a buyer looking for the right mortgage, we’re here to help. Contact us at info@crowdpropertycapital.com.au or fill in this form.
