Written by Effective from 1 April 2025, The Australian Government has announced sweeping reforms to foreign investment rules in the residential property sector, aiming to curb foreign purchases of established dwellings, introduce higher fees, and tighten compliance measures. The goal? To address the ongoing housing affordability crisis and prioritise homeownership opportunities for Australian residents. At the heart of these changes is a two-year moratorium on foreign acquisitions of established residential properties. From 1 April 2025 to 31 March 2027, foreign individuals—including temporary residents—and foreign-owned entities will be prohibited from purchasing existing homes in Australia.
This represents a marked departure from previous policies, which allowed foreign investors to purchase established dwellings under strict conditions, such as a requirement to redevelop the property. The government’s rationale for this temporary prohibition is clear: reducing competition in the housing market and prioritising local buyers who have long been struggling with affordability pressures. However, foreign investments that contribute to housing supply—such as redevelopment projects that result in a net increase in dwellings—will still be allowed. Additionally, properties intended for accommodation under the Pacific Australia Labour Mobility (PALM) scheme, which provides seasonal worker housing, will also be exempt from the ban.
Beyond the moratorium, foreign investors will face significantly higher costs and stricter compliance measures. The government has introduced financial deterrents to further discourage foreign acquisitions of established homes, including:
- Tripling of application fees: Foreign buyers who qualify for exemptions will now face application fees three times higher than before, a move designed to make such purchases less attractive.
- Doubling of vacancy fees: Foreign-owned residential properties that remain vacant for extended periods will be subject to double the existing vacancy fees, ensuring that homes are occupied and contributing to supply.
- Increased enforcement funding: The Australian Taxation Office (ATO) and Treasury have been allocated an additional $5.7 million over four years to strengthen enforcement against non-compliance and land banking practices.
The combination of these measures makes it clear that foreign investors must tread carefully when navigating Australia’s evolving property market. Properties must be put to productive use within a reasonable timeframe, or investors risk facing penalties for land banking.