Investors who rely on negative gearing on their loss-making properties have been dealt a blow.

Under changes made by Bankwest on February 10, the serviceability calculators used to determine how much they will lend to borrowers were updated to remove negative gearing tax benefits.

The change was brought in to align the lender with “best practice and guidance from regulators,” a spokesman confirmed in an emailed statement.

“For customers who operate their investment property at a loss, where the income of the investment property does not exceed the costs, the related tax benefit will no longer be included in Bankwest’s calculation for serviceability of the loan.

“This impacts all new applications involving an investment lending facility and any existing deals which may require a new serviceability calculation after 10 February 2017.”

For those who were relying on their negative gearing tax breaks to push them over the line for a loan, this means they’ll now need to look elsewhere.

The Commonwealth Bank of Australia, who owns Bankwest, also recently changed its treatment of investor loans, putting the breaks on new lending to property investors.

But the decision to remove the benefits from their calculator is not surprising, Mortgage Choice spokeswoman Jessica Darnbrough said, noting it’s not the first time a lender has opted not to include negative gearing in their serviceability calculations.

“The lender has made it clear that it wants to be a sustainable business through prudent lending choices, and its latest policy change feeds into this,” she said.

The latest policy change was “unlikely to affect a lot of borrowers” with many other lenders still willing to deal with new and existing investors.

A tightening up on investor lending activity was foreshadowed in a 2015 speech by Australian Prudential Regulation Authority chairman Wayne Byres.

When a real estate investor goes to buy a property, providing the estimated rent to the lender to show how the repayments will be met is a common part of the process.

Mr Byres noted the practice of applying a “haircut” or a discount to declared rental income on an investment property of about 20 per cent was the norm, but noted some “based their serviceability assessment on smaller, or even zero, haircuts”.

“Bearing in mind that the cost of real estate fees, strata fees, rates and maintenance can easily account for a significant part of expected rental income, and this does not take into account potential periods of vacancy, the 20 per cent norm itself does not seem particularly conservative,” he said.

“We also came across a few instances in which [lenders] were relying on anticipated future tax benefits from negative gearing to get a borrower over the line for a mortgage.”

It’s possibly that other banks will follow suit when they have to reduce their investor loans, property investment advisory ReThink Investing director Scott O’Neill said.

But it was far more likely they would consider more common techniques to slow investor lending, such as reducing the discount rates on investor loans and blocking postcodes.

In the meantime, the Bankwest changes were “not going to have any impact on the investor market … [because] nearly all other banks include the negative gearing calculations in their figures,” Mr O’Neill said.

An investor who required negative gearing to service a loan was a “risky borrower,” he said.