The Australian government has strict regulations governing foreign investment in residential property. On March 14, 2025, the Guidance Note 6: Residential Land was updated, introducing new conditions, restrictions, and exemptions for foreign investors.
As a Brisbane-based property law firm, Ensure Legal is here to help you navigate these regulatory changes, ensuring compliance and minimizing legal risks when investing in Australian real estate.
1. General Rules for Foreign Investment in Residential Property
Under Australia’s foreign investment framework, foreign investors must obtain approval before purchasing residential land. The government’s policy encourages investment in new housing developments rather than existing properties, aiming to:
- increase housing supply for Australian residents
- boost construction industry jobs and economic growth
- generate tax revenue through stamp duty and other levies
Key Rules:
- Foreign investors cannot purchase established dwellings, except in limited cases.
- Foreign investors can purchase vacant land or newly built properties, subject to specific conditions.
- All foreign investment applications must be submitted to the Australian Taxation Office (ATO), with application fees payable.
2. Purchasing Vacant Residential Land
Foreign investors can buy vacant land for residential development but must adhere to the following conditions:
- Construction must be completed within four years of approval.
- The land cannot be sold before construction is completed.
- A certificate of completion must be submitted to the government.
Failure to meet these conditions may result in penalties, forced divestment, or legal action.
3. Purchasing New or Near-New Dwellings
Foreign investors can purchase new or near-new dwellings, provided that:
- The property has not been previously occupied or sold (or the previous sale did not settle).
- The dwelling is part of a large-scale development, such as apartment buildings with 50 or more units.
- Once acquired, there are no restrictions on occupying or renting the property, but an annual vacancy fee may apply.
To simplify the approval process, property developers can apply for a New Dwelling Exemption Certificate, allowing foreign investors to purchase units within the development without applying individually.
4. Ban on Purchasing Established Dwellings (Effective April 1, 2025)
From April 1, 2025, to March 31, 2027, foreign investors are banned from purchasing established dwellings in Australia, with a few exceptions.
1. Redevelopment Projects
- Foreign investors can redevelop an existing dwelling only if they add at least 20 additional dwellings.
- The project must be completed within four years, and the property cannot be sold before completion.
2. Large-Scale Housing Supply Projects
- This includes retirement villages, student accommodation, and aged care facilities.
3. Housing for Employees
- Foreign-controlled companies employing workers from Pacific Island nations or Timor-Leste, such as under the Pacific Australia Labour Mobility (PALM) scheme, can buy established dwellings to house workers.
4. Build-to-Rent (BTR) Developments
- Foreign investors can buy existing Build-to-Rent developments, provided they continue to be operated as rental properties.
All applications are assessed case-by-case, and additional conditions may apply.
5. Annual Vacancy Fee for Foreign-Owned Properties
To discourage vacant properties, the government requires foreign investors to pay a vacancy fee if their property is not occupied or rented for at least 183 days, approximately six months, per year.
Foreign investors must submit an annual vacancy fee return to the ATO.
Failure to submit this return on time may result in an automatic fee assessment, even if the property was occupied.
6. Legal Requirements and Penalties
Foreign investors must apply for approval before purchasing any residential property.
Failure to comply with the law may result in:
- Forced sale of the property
- Heavy fines, potentially reaching hundreds of thousands of dollars
- Visa cancellation, where applicable
7. How to Ensure Compliance
If you are a foreign investor considering purchasing residential property in Australia, Ensure Legal recommends the following:
- Seek legal advice before purchasing to confirm compliance with Australian foreign investment laws.
- Submit applications early to avoid delays in the approval process.
- Ensure development projects meet legal requirements, especially for vacant land purchases.
For legal guidance on foreign investment approvals, property purchase contracts, and development compliance, contact Ensure Legal today. Our experienced property lawyers in Brisbane are here to help you make informed and legally compliant investment decisions.
This blog post is based on the 2025 Guidance Note 6: Residential Land. If you need tailored legal advice regarding your foreign property investment, reach out to Ensure Legal for expert assistance.
