The Australian Government has put in place a new policy that bans foreign buyers from purchasing established property in Australia for a period of two years. The new policy commences on 1 April 2025 and is set to conclude on 31 March 2025.
The policy is designed to help address the housing affordability crisis plaguing Australia by providing less competition to local buyers to help them get into the market. By banning foreign buyers there should be an increase in the availability of homes to Australian residents, with hopes this will also address escalating property prices.
The Government put the policy in place following public concern over housing affordability and availability.
In announcing the policy, Housing Minister Clare O’Neil said that while the policy “isn’t a silver bullet, because there is no silver bullet, it is an important piece of Labor’s absolutely massive housing agenda.”
She stated that, “everything we do on housing is about getting more Australians into their own homes, and this change will play a part in that.”
To assist in enforcement of the Ban the Government also allocated an additional $5.7 million in funding over four years to the Australian Tax Office to assist in their compliance and auditing efforts of the policy.
In the 2022-2023 financial year around 5,360 residential properties were purchased by foreign investors, worth around $4.9 billion dollars.
Prior to the new policy foreign investors could buy existing dwellings in circumstances where they came to Australia for work or study, but the Government has now put an end to this.
The Government will also crack down on land banking by foreigners, where vacant land is purchased and not developed in a certain timeframe. This often occurs where land is purchase with no intention of developing it, then when prices rise, the land is sold for a profit.
At the end of the two-year period a review is set to take place to look at the impact the policy had and whether this should be extended.
There are exceptions to the policy, including in the purchase of new and off-the-plan properties, such as new high-rise developments, which still allow foreign investment in residential property. Other exceptions include where the purchase will significantly increase housing supply, or where the Pacific Australia Labour Mobility (PALM) scheme applies.
For more information on this policy, please contract our conveyancing and property lawyers.