On 16 February 2025, the Australian Government announced major changes to foreign investment rules for residential property, signalling a shift in policy aimed at improving housing affordability and accessibility for local buyers.

From 1 April 2025, a two-year ban on foreign acquisitions of established dwellings came into effect, alongside stricter compliance measures and increased fees for certain transactions. These changes carry significant implications for foreign investors, developers and the broader housing market.

Temporary ban on foreign purchases of established dwellings

Under the new rules, foreign individuals (including temporary residents) and foreign-owned entities are now prohibited from purchasing established residential properties in Australia between 1 April 2025 and 31 March 2027. This marks a significant departure from While these carve-outs aim to maintain a level of foreign investment in the property sector, they are narrowly defined and will limit speculative acquisitions by foreign investors.

Higher foreign investment fees and tighter compliance

In addition to the temporary ban, the government is increasing fees and stepping up enforcement. Application fees for established homes will triple, making it significantly more expensive for foreign investors to acquire these properties in exceptional cases. Vacancy fees will double for foreign-owned properties left unoccupied for extended periods, encouraging more active use of housing stock.

To further strengthen compliance, the Australian Taxation Office and Treasury have been allocated $5.7 million over four years to strengthen monitoring and enforcement of foreign investment laws. This includes targeting non-compliance and land banking practices.

These financial deterrents, combined with the temporary ban, mark a clear effort by the government to redirect foreign capital away from established housing and towards new developments that expand the housing supply.

Legal considerations for foreign investors and developers

Given the sweeping nature of these changes, foreign investors and developers should carefully assess their strategies and ensure they meet all compliance obligations. Investors with existing approvals should have moved to complete transactions before 1 April. New developments may offer an alternative for foreign buyers, subject to approval from the Foreign Investment Review Board (FIRB).

Many foreign investors were already subject to development conditions when acquiring vacant land in Australia. These conditions were designed to ensure timely development and discourage land banking. With increased enforcement now in place, the risk of penalties for non-compliance has also grown.

Navigating the updated foreign investment landscape

The Australian Government’s latest foreign investment restrictions reflect a broader policy push to rebalance the housing market in favour of domestic buyers. Foreign investors and developers will have to adapt their strategies, ensuring full compliance with the evolving regulatory framework. In February, a new Foreign Investment Review Board portal was launched to modernise the submission and compliance process for foreign investment applications.

For investors and real estate professionals, staying across these changes and seeking legal guidance where needed will be essential as the market adjusts to this new regulatory environment.past policy, which generally allowed foreign investors to acquire established homes under specific conditions, such as redevelopment requirements.

The government has stated that the primary objective of the ban is to reduce competition in the housing market and prioritise homeownership opportunities for Australians.

Exemptions to the ban

Some limited exemptions will apply. Transactions that demonstrably increase the housing stock, such as redevelopment projects that result in a net increase in dwellings, will still be permitted. Properties intended for accommodation under the Pacific Australia Labour Mobility (PALM) scheme will also be exempt.

By Holding Redlich Special Counsel Jeanne Vallade.