The Federal Government’s two-year ban on foreign investors purchasing established homes came into effect on April 1.
From 1 April 2025, foreign investors (including temporary residents and foreign-owned companies) will no longer be able to purchase established dwellings in Australia unless an exception applies.
This restriction will remain in place until at least March 31, 2027, with a review scheduled before the ban’s expiration to assess whether it should be extended.
The new policies are part of a broader strategy to tackle housing affordability in Australia. By limiting foreign ownership of established dwellings, the government aims to ensure more housing remains available to Australian citizens and residents.
Despite the broad restriction, certain exemptions will apply:
Foreign investments supporting housing supply:
Transactions that demonstrably increase the housing stock, such as redevelopment projects that result in a net increase in dwellings, will still be permitted
Pacific Australia Labour Mobility scheme:
Properties intended for accommodation under the scheme, which supports seasonal workers in key industries, will also be exempt.
While these carve-outs aim to maintain a level of foreign investment in the property sector, they are narrowly defined and will limit speculative acquisitions by foreign investors.
Other existing exceptions remain in place, such as for purchases by permanent residents, New Zealand citizens and spouses of Australian citizens, permanent residents or New Zealand citizens (when purchased as joint tenants).
Under current regulations, foreign investors require prior Foreign Investment Review Board (FIRB) approval to purchase both vacant residential and commercial land, regardless of value.
To prevent land banking, FIRB typically imposes development conditions on such approvals. Fo vacant residential land, investors are generally required to construct at least one residential dwelling and complete construction within four years from the date of approval, while for vacant commercial land, investors must develop the land and commence continuous construction of the proposed development within five years of completing the purchase.
The government is boosting funding and resources to strengthen the ATO’s compliance functions, including to implement a new audit program and enhance monitoring capabilities. As a result, foreign investors acquiring or holding vacant commercial land should expect heightened scrutiny to ensure compliance with development conditions.
The specific guidelines for these measures are subject to change. Investors should closely monitor these developments and any regulatory updates when planning their investments in Australia’s residential market.
Contact RMB Lawyers for any further information about this new law. Your first step should be to contact our office to arrange a free consultation. You can contact us by by phone or our 'Ask a Question' tool on our website.