On 16 February 2025, the Government announced that from 1 April 2025 until 31 March 2027, foreign persons (including temporary residents and foreign-owned companies) will be temporarily banned from purchasing established dwellings in Australia unless an exception applies. This period may be extended according to the Australian Taxation Office, but this is yet to be seen.
These limited exceptions will include investments that significantly increase housing supply or support the availability of housing supply, and for the Pacific Australia Labour Mobility (PALM) scheme, which allows foreign companies employing workers from Pacific island countries and Timor-Leste to purchase established dwellings to accommodate their workers. In these instances, evidence of approval from the ATO is required.
The Government also announced that the Australian Taxation Office (ATO) and Treasury will implement an audit program and enhance their compliance approach to target land banking by foreign investors.
❌ Who Is Affected?
Foreign persons, including:
- Temporary residents (e.g. student, work visa holders)
- Foreign nationals
- Foreign-owned companies
They will not be permitted to buy established (i.e. second-hand) residential dwellings in Australia.
✅ Exceptions (Who Can Still Buy Established Dwellings)
- Australian citizens (even if living overseas)
- Permanent residents
- New Zealand citizens
- spouses of Australian citizens, permanent residents or New Zealand citizens (when purchased as joint tenants).
Anyone who approaches a real estate agency — whether at auction or via private treaty—should be subject to the following verification steps prior to negotiation or contract execution:
- Obtaining a certified copy of the buyer’s passport, which is not to expire for at least six months; this is being cautious and if it is to expire in less than six months, this should be fine however there is a small risk that it could expire prior to settlement of the transaction, and their Australian citizenship revoked in the meantime.
- Sighting the original passport to confirm authenticity.
- If the purchaser is a company, they should be asked for an ASIC Company Search to verify if they are an Australian company. Normally the Directors/Attorneys signing the contract on behalf of the company as the purchaser, swill need to be Australian citizens and their passports checked too.
- In addition to this, if it is ascertained that an individual or company is foreign, the should be asked for evidence of approval from the ATO or under the PALM scheme that they can purchase the established property.
- As per the ATO, it is mandatory that the assessment of whether a person is eligible to purchase prior to auction or purchase has taken place;
This is reiterated in the following ATO webpage found at https://www.ato.gov.au/individuals-and-families/investments-and-assets/foreign-resident-investments/foreign-investment-in-australia/residential-property-application-for-foreign-investors
- As a solicitor, I normally ask these questions when amendments have been requested by potential purchasers but contract exchanges often take place without my knowledge. In the instance that exchange occurs without my knowledge, I would ask these questions during the cooling off period if there is one, or prior to settlement, but it is best that I do not have to rescind the contract because of this down the line, even if there are no repercussions. It will likely be difficult for a purchaser to recover their holding deposit (2.5% of the deposit) during the cooling off period in this instance, and I could foresee potential litigation arising due to the breach of contract in instances where there is no cooling off period.
- As solicitors, we cannot proceed with settlement unless we have established that the purchaser is not foreign or has approval by the ATO/under the PALM scheme to purchase the property as a foreign purchaser.
- I believe it would be wise for real estate agencies to implement a policy whereby potential buyers are vetted as soon as possible, with a requirement that they must prove their eligibility to purchase property prior to making an offer to purchase the property. If bidders were to attend an auction, they should all be vetted on the day, and sufficient evidence should be provided that they are eligible to purchase the property, in line with all of the above listed criteria.
There are no restrictions on foreign purchasers purchasing new or near new dwellings. Please see the below definitions of new and near new dwellings as per the page found on the following ATO link: https://www.ato.gov.au/individuals-and-families/investments-and-assets/foreign-resident-investments/foreign-investment-in-australia/exemption-certificates-for-property-developers#whatisanewdwelling
In addition to this, foreign purchasers are also permitted to purchase the following properties (https://www.ato.gov.au/individuals-and-families/investments-and-assets/foreign-resident-investments/foreign-investment-in-australia/types-of-property-a-foreign-person-can-buy):
- An established dwelling for redevelopment; I believe this falls under the near-new dwelling criteria of residential development as listed above
- An off-the-plan property
- Vacant residential land
I believe there will be times where real estate agents may be unsure if a property falls under the category of a new or near-new dwelling based on the above criteria and whether the foreign purchaser can purchase a property that falls under this category. In these instances, I believe it is best to make enquiries with the ATO first before accepting an offer. Solicitors can also make these enquiries on behalf of real estate agencies; that way we can exercise our best judgement when proceeding with a purchase transaction.
In providing you with all of this information, I have relied on the information found on the Australian Taxation Office website.
Please contact DP Law for all conveyancing services you may require.
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