The Australian Government recently announced a two-year ban on foreign buyers purchasing established dwellings in Australia. The ban will take effect from 1 April 2025 and continue until 31 March 2027. The measure is intended to ease pressure on the housing market and increase the availability of existing homes for local buyers.
To enforce the ban, the Government has allocated 5.7 million AUD to the Australian Taxation Office (ATO) to strengthen compliance, monitor property transactions, and audit potential breaches. An additional 8.9 million AUD will be provided to the ATO and Treasury to implement an audit program targeting land banking by foreign investors, ensuring that vacant land is developed within a reasonable timeframe.
While the ban introduces restrictions on purchasing certain types of properties, foreign investors still have legal avenues to invest in Australian real estate. These options include off-the-plan residential properties, new commercial developments, and vacant land intended for development. Understanding these alternatives is essential for foreign buyers seeking to comply with Australia’s foreign investment regulations.
Scope of the Ban and Available Investment Options
What the Ban Prohibits
The new regulations prohibit foreign buyers from purchasing:
- Established dwellings, which include existing residential properties that have been previously occupied or sold. Limited exceptions may apply, such as for redevelopment projects that increase housing supply.
- Properties acquired through nominee arrangements or complex ownership structures designed to bypass the ban. Anti-avoidance provisions will apply to prevent foreign buyers from using nominee agreements, trusts, or company structures to evade compliance with the regulations.
What Foreign Buyers Can Still Purchase
Foreign buyers can still legally invest in the following types of properties:
- Off-the-plan residential properties, which include apartments, townhouses, and other residential units in developments that are not yet completed. These properties contribute to increasing the housing supply and are exempt from the ban.
- New commercial developments, including office buildings, industrial facilities, and mixed-use properties. These investments remain open to foreign investors and support economic growth.
- Vacant land for development, subject to conditions that require the land to be developed within a reasonable period. This ensures that land is put to productive use and contributes to urban development.
Legal Basis for Permitted Investments
Foreign Acquisitions and Takeovers Act 1975 (FATA)
The Foreign Acquisitions and Takeovers Act 1975 governs foreign investment in Australia and establishes the conditions under which foreign buyers can invest in different types of properties. Under FATA, foreign buyers can invest in the following types of properties:
- New dwellings and off-the-plan developments, as specified in section 8 of FATA, provided the development is approved by the Foreign Investment Review Board (FIRB).
- Commercial properties, subject to FIRB approval for transactions exceeding certain monetary thresholds.
- Vacant land for development, with conditions requiring development to commence within a reasonable period and be completed within the specified timeframe.
FIRB Approval and Compliance Conditions
Foreign buyers must obtain FIRB approval before purchasing off-the-plan properties, new commercial developments, or vacant land. Approval conditions are intended to ensure that the investment contributes to housing supply or economic development. These conditions typically include:
- Commencing development on vacant land within five years of acquisition and completing construction within a reasonable timeframe.
- Ensuring that the investment supports the Government’s objectives of increasing housing supply and contributing to economic growth.
Investment Options for Foreign Buyers Despite the Ban
Off-the-Plan Residential Properties
Foreign buyers can purchase off-the-plan apartments, townhouses, and other residential properties in developments that are not yet completed. These properties remain an accessible investment option, as they contribute to increasing the housing supply. FIRB approval is required before purchasing, and settlement can only occur after construction is completed.
New Commercial Developments
Foreign buyers can continue to invest in new commercial developments, such as office buildings, industrial complexes, and retail centres. These types of investments support economic growth and are not subject to the ban on established dwellings. FIRB approval may be required depending on the value of the transaction and the type of commercial property being acquired.
Vacant Land for Development
Foreign buyers can purchase vacant land for development, provided they comply with FIRB conditions that require the land to be developed within a reasonable timeframe. FIRB approval is required, and conditions typically stipulate that construction must commence within five years and be completed promptly to ensure that the land is put to productive use.
Compliance Obligations and FIRB Conditions
FIRB Application and Approval Process
Foreign investors intending to purchase off-the-plan properties, new developments, or vacant land must apply for FIRB approval before completing the transaction. The application process involves providing detailed information about the buyer, the property, and the intended use. FIRB approval may be subject to conditions to ensure that the investment aligns with Australia’s housing and economic priorities.
Anti-Avoidance Measures
The Australian Government has introduced enhanced compliance measures to prevent foreign buyers from circumventing the ban through nominee agreements, trusts, or complex ownership structures. The ATO has been allocated 5.7 million AUD to strengthen compliance efforts and audit suspicious transactions. An additional 8.9 million AUD has been allocated to target land banking and ensure that vacant land is developed within a reasonable timeframe.
Legal Risks and Penalties for Non-Compliance
Civil and Criminal Penalties
Breaches of Australia’s foreign investment laws can result in significant penalties under section 102 of the Foreign Acquisitions and Takeovers Act 1975. Penalties may include:
- Civil penalties of up to 10 percent of the property’s market value or 2,500 penalty units, whichever is greater. As of 2025, each penalty unit is valued at 275 AUD, making 2,500 penalty units equivalent to approximately 687,500 AUD.
- Forced divestment of properties acquired without FIRB approval.
- Criminal penalties for intentional breaches or the provision of misleading information during the FIRB application process.
How Ensure Legal Can Assist Foreign Buyers
With increasing compliance obligations and heightened scrutiny of foreign investment transactions, Ensure Legal can assist foreign investors in navigating the complexities of Australia’s foreign investment regulations. Our services include:
Assistance with FIRB Applications
- Preparing and submitting FIRB applications for off-the-plan properties, commercial developments, and vacant land.
- Ensuring that all necessary documentation is provided to support approval and that the application complies with FIRB requirements.
Due Diligence and Compliance Checks
- Conducting due diligence on property transactions to ensure compliance with FIRB regulations.
- Identifying potential anti-avoidance risks and addressing complex ownership structures.
Review of Transaction Agreements
- Reviewing transaction agreements to ensure that all required conditions and compliance obligations are met.
- Ensuring that agreements include appropriate clauses to reflect FIRB conditions and development timelines for vacant land.
Exploring Legal Investment Options Despite the Ban
The two-year ban on foreign buyers purchasing established dwellings, effective from 1 April 2025 to 31 March 2027, introduces new restrictions but does not eliminate all opportunities for foreign investors in the Australian property market. Off-the-plan residential properties, commercial developments, and vacant land for development remain legally permissible investment options. Foreign buyers who obtain FIRB approval and comply with development conditions can continue to invest in Australia’s growing real estate sector.
To ensure compliance with Australia’s foreign investment regulations and safeguard property transactions, contact Ensure Legal for assistance with FIRB applications, compliance checks, and transaction reviews.
