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Australia Imposes Temporary Ban on Foreign Purchases of Established Homes

Effective April 1, 2025, to March 31, 2027, this measure aims to prioritise housing availability for Australian buyers, preventing foreign investors from purchasing properties that could otherwise be acquired by local residents.

The Australian federal government has historically upheld policies that largely restrict foreign individuals from purchasing existing residential properties, with limited exceptions; primarily allowing temporary residents to acquire a home for personal use as their principal place of residence.

However, on February 16, 2025, the Australian Government announced a two-year moratorium on foreign ownership of established homes. Effective April 1, 2025, to March 31, 2027, this measure aims to prioritise housing availability for Australian buyers, preventing foreign investors from purchasing properties that could otherwise be acquired by local residents.

Updated Residential Land Guidelines and New Exceptions

On March 14, 2025, the Treasury issued an updated Residential Land Guidance Note, officially removing the prior exception for temporary residents while also outlining specific exemptions to the ban.

These exceptions include:

Large-Scale Redevelopment Projects

Foreign buyers may obtain approval to purchase an existing dwelling if they commit to redeveloping the property into a minimum of 20 additional dwellings. This is a significant shift from the previous rule, which only required the addition of one extra dwelling.

Commercial-Scale Housing Projects

Foreign investors can apply for approval when purchasing properties intended to support housing at a commercial level. This includes multi-unit developments such as retirement villages, assisted living facilities, aged care homes, and student accommodation. While this exception is newly formalised in the guidance, it aligns with existing practices.

Build-to-Rent (BTR) Developments

Foreign investors can acquire established Build-to-Rent (BTR) properties under certain conditions. This exemption extends beyond direct acquisitions to include indirect investments, such as purchasing equity in entities that own BTR developments.

To qualify, the BTR project must:

Consist of at least 50 rental dwellings.
Offer lease terms of at least five years per unit.
Allocate at least 10% of the units as affordable housing.
Maintain compliance with these conditions for the shorter of 15 years or the duration of foreign ownership.

Key Considerations and Potential Challenges

The Government first signalled the BTR exemption on May 1, 2024, but only recently provided detailed guidelines.
The updated regulations do not address scenarios where a foreign minority investor may lack control over compliance with the conditions. For example, without contractual protections like veto rights, a minority investor might be compelled to divest their interest to avoid violating the rules.
Not all BTR projects automatically qualify as residential land under the Foreign Investment Review Board (FIRB) regulations. Many developers initially acquire vacant commercial land with plans to construct BTR apartments, and investors may fund projects before the land officially transitions to residential classification. These cases remain unaffected by the ban.

Conclusion

With housing affordability remaining a key concern, Australia’s temporary ban on foreign acquisitions of existing homes is expected to boost local buyers’ access to property.

While the new exceptions provide investment avenues for large-scale housing developments, compliance challenges remain for certain investors.

As policies continue to evolve, stakeholders should closely monitor Treasury updates to ensure adherence to FIRB regulations.

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The information in this article is not legal advice and is intended to provide commentary and general information only. It should not be relied upon or used as a definitive or complete statement of the relevant law. You should obtain formal legal advice specific to your particular circumstance. Liability limited by a scheme approved under Professional Standards Legislation.