Trust legislation small builders say they cannot absorb is now before parliament, and the industry body that represents them says nothing in the bill answers the concerns raised during consultation. On 14 October 2026, the body’s chief executive argued the legislation shows little understanding of the combined pressures already sitting on small firms. He predicted 2026 would be remembered as a year of heavy burdens for them.
That is an industry lobby talking, and it pays to read it as one. But the numbers behind the complaint are worth taking seriously, because they point at the one thing the housing market cannot afford: fewer homes being built.
Why one in five small builders is exposed
About one in five small building businesses use a trust arrangement. For a small firm, a trust is often a practical tool. It can spread income, hold assets separately from the operating business, and keep family finances apart from commercial risk.
The government softened its position somewhat after the original Budget announcement. Even so, the choice for these firms is still uncomfortable. They can accept less flexibility inside the structure they have, or they can pay for a costly restructure into a new entity. Many may also face materially higher tax bills.
Key numbers
- About 1 in 5 small building businesses use a trust
- 60 per cent of surveyed small and medium developers expect the measure to change the timing or viability of projects
- 37 per cent of that group say at least one project would be abandoned
The catch: restructuring is not free
A restructure sounds like paperwork. In practice it can mean legal and accounting fees, new contracts, new licences or registrations, and fresh dealings with lenders and suppliers. A small builder running tight cash flow between progress payments has little room to fund that.
Then there is the consumer side. The industry body warns that a move to a new entity could put protections such as statutory warranties at risk. This is a real second-order effect. Warranty and insurance arrangements are often tied to the track record and structure of the builder. A newly formed entity starts without that history, which may complicate cover for the buyers who rely on it.
The release does not spell out exactly how those protections would be affected, so treat that as a flagged risk rather than a confirmed outcome.
What the developer survey is really saying
The survey covered small and medium developers, both residential and commercial. Sixty per cent said the change would alter whether or when their projects go ahead. Of those, 37 per cent expect at least one project to be scrapped.
Be careful with that figure. It measures stated expectations among a self-selected group, not actual cancellations. Developers have a clear interest in showing a policy will bite. Still, projects that are marginal on today’s costs are exactly the ones a new tax or compliance burden can tip over.
This matters because small and medium builders do much of the detached and low-rise work that adds housing at the margin. When a few projects each slip by a year, the effect on completions is not dramatic in any one month. Across a pipeline, it adds up. Our guide to housing supply, approvals and building costs covers why the gap between approvals and completions is already wide.
Insolvency risk and the stacking problem
The chief executive’s core argument is about stacking. This bill does not land on a stable sector. Small builders are already dealing with cost pressure, tight margins and the knock-on effects of earlier policy changes. Any one extra cost might be manageable. The combination is what raises insolvency risk.
When a small builder fails mid-project, the damage spreads. Buyers wait longer, subcontractors go unpaid, and the work often has to be re-tendered at a higher price. That is a cost carried by households and the wider economy, not only by the firm.
It also ties into broader compliance pressure on investors and operators. Our piece on tax compliance costs and why investors should care about $60b shows how rising paperwork burdens compound across the property sector.
Who wins, who loses
The policy intent behind trust reform is generally about fairness and revenue integrity. That is a legitimate goal, and this article does not argue the reform has no merit. The question is design and timing.
The likely losers if the bill passes unchanged are small builders with existing trust structures, and the buyers and renters who depend on the homes they would have delivered. Larger builders with established corporate structures face less disruption, which could nudge the market toward fewer, bigger players. Whether that is good or bad depends on who you ask, but it is a change the bill’s authors should state openly.
What the industry wants
The body’s asks are specific:
- Grandfather existing businesses so current structures are not forced to change.
- Failing that, create a dedicated small business exemption.
- Hold a parliamentary inquiry into the bill before it proceeds.
Grandfathering would protect current operators but could leave new entrants facing the same hurdles. An exemption needs a clear definition of “small”, and definitions are where loopholes and disputes tend to appear. An inquiry buys time and evidence, which is its main value, though it also delays certainty for firms trying to plan.
What to watch next
Three things will show whether this becomes a real supply problem or a contained adjustment:
- Whether the government amends the bill to add grandfathering or an exemption.
- Whether a parliamentary inquiry is called and what evidence it takes from builders.
- Whether approvals and starts data over the coming quarters show small-builder activity falling.
If you are a small builder with a trust, the practical next step is to get advice on your structure now, before the final bill settles, so you know the cost of each option. If you are a buyer with a contract in progress, ask your builder how the change could affect warranty cover.
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General info, not financial advice.
