The Albanese government is cracking down on foreign investors, after it was recently announced that temporary residents will be barred from buying existing homes for at least two years.
While the temporary ban is designed to last from 1 April 2025 until 31 March 2027, the Australian federal government has announced it will conduct a review during the 2 years period to determine whether the ban should be extended or made permanent.
Before the new policy was announced, it has always been the case that foreign investors were generally barred from buying existing property, except in very limited circumstances, such as when they come to Australia for work or study. Starting from 1 April 2025, foreign investors (including temporary residents and foreign‑owned companies) will no longer be able to purchase an established dwelling in Australia while the ban is in place unless an exception applies.
The federal government will also provide $5.7 million over 4 years to the Australian Taxation Office’s (ATO) foreign investment compliance team to enforce the ban and enhance screening of foreign investment proposals relating to residential property.
Alongside the temporary ban on foreign purchases of established dwellings, it was also announced that the federal government will implement an audit and compliance program to tackle land banking by foreign investors. $8.9 million over four years from 2025–26 will be provided to the ATO and Treasury with a further $1.9 million from 2029–30.
During this time, there will be an enhanced compliance approach by both the ATO and Treasury to discourage and to catch overseas owners engaging in “land banking”, the practice of holding on to valuable land and not developing it within the required timeframe.
These new policies are a part of the Albanese Government’s $32 billion Homes for Australia plan and comes as a response to the housing crisis seen in Australia, where the high cost of housing and foreign land banking are two significant factors. Even though the policy is targeted at foreign investors who do not normally reside in Australia, the two year ban will directly impact those living temporarily in Australia, either for work or study.
If you feel that you will be affected by the new policy or are unsure whether it will apply to you, speak to a member of our property team today to ensure compliance and minimise your risks.
