For years, I have assisted foreign investors in acquiring properties across Australia, helping them navigate complex legal requirements and secure investments in a thriving real estate market. However, significant changes are coming to foreign property ownership laws in Australia, and it’s crucial to understand their implications, benefits, and how they will shape the housing market moving forward.
New Law: Temporary Ban on Foreign Purchases of Existing Homes
Effective April 1, 2025, the Australian Government is introducing a two-year ban on foreign investors purchasing established (existing) residential properties. This measure will remain in place until March 31, 2027, after which a review will determine its future.
Foreign investors, however, will still be allowed to purchase new properties or vacant land for development, ensuring continued investment in Australia’s housing market but shifting focus toward increasing supply rather than acquiring existing stock.
How This Law Impacts Foreign Investors
- Existing Home Ban – Foreigners can no longer purchase pre-owned homes, limiting options for direct property acquisition.
- New Property Focus – Foreign buyers will be encouraged to invest in off-the-plan developments or vacant land, which contributes to new housing projects.
- Economic Shift – With fewer international buyers competing for existing homes, Australian residents may find improved affordability in the local market.
Real-Life Example: How Legal Advice Can Prevent Costly Mistakes
I recently had a client from Canada who visited Australia and assumed she could buy a property here just as easily as in the U.S., where Canadians face no restrictions on real estate purchases. Without seeking legal advice, she attended an auction in Collingwood and successfully bid on an existing property. She signed the contract of sale without consulting a lawyer or conveyancer.
Later, when she reached out to me, it was too late to undo the purchase. Had she consulted me beforehand, I would have advised her to buy a new development instead of an existing home.
Here’s why:
- The Foreign Investment Review Board (FIRB) fees for purchasing an existing property valued at $1 million or less are $42,300, compared to $14,100 for a new development—a substantial difference.
- As a temporary resident, she could only purchase one established home as her principal place of residence and had to meet strict conditions:
- The property must be vacant at settlement.
- She must live in it as her primary residence.
- She cannot rent it out.
- She must sell the property within six months of leaving Australia.
Given these limitations, we worked swiftly to nominate another buyer. Her daughter, who was in Australia on a temporary visa, was able to acquire the home as her residential property. This legal strategy helped mitigate my client’s losses and avoid unnecessary complications.
The Positive Side: How This Helps Australia’s Housing Crisis
Boosting Housing Supply & Development
The restriction on existing home purchases is not a ban on foreign investment but rather a strategic move to redirect capital into new housing developments. By allowing foreign buyers to invest only in newly built properties or development projects, the government aims to:
- Increase Housing Availability: More new developments mean more homes available for Australian residents.
- Support Construction & Jobs: Encouraging new developments supports local builders, contractors, and the real estate sector, boosting the economy.
- Improve Affordability: With less foreign competition in the existing property market, Australian homebuyers may have better access to properties.
Why This Law Is a Temporary Solution
While this new policy will help stabilize housing affordability, it is not a permanent fix. The real solution lies in boosting housing supply, and that’s exactly where this law directs investment. By encouraging foreign capital into new developments, it ensures that Australia builds more homes, rather than just redistributing existing ones.
Exceptions to the Foreign Buyer Ban (Effective April 1, 2025)
The two-year ban on purchasing established homes has some exceptions, including:
- Investments that significantly increase housing supply.
- Purchases related to the Pacific Australia Labour Mobility (PALM) Scheme.
- Purchases by permanent residents, New Zealand citizens, or spouses of Australian citizens/permanent residents (when buying as joint tenants).
How I Can Help You Navigate These Changes
With years of experience in helping international buyers purchase property across all Australian states, I understand the complexities of legal compliance and investment strategies under changing laws. Whether you’re an overseas investor or a local developer, my expertise can help you:
- Understand new investment pathways: Navigating the legal and regulatory landscape for foreign property buyers.
- Secure new development opportunities: Identifying high-potential projects that meet foreign investment requirements.
- Ensure compliance: Avoiding pitfalls and ensuring a smooth purchasing process.
If you are considering investing in Australia’s property market and want expert guidance on the best legal strategies, Shawn Mendis Lawyers is here to help. Contact me today for a personalized consultation on your investment options.
📞 Call: 03 8774 9663
📧 Email: contact@shawnmendislawyers.au
📍 Visit Us: 198 Henry Road, Pakenham VIC 3810
Stay informed, stay compliant, and make the most of the evolving Australian property market with expert legal support.
