ByLawyers News and Updates

Foreign purchasers – FED

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Ban on foreign purchasers buying established dwellings

Between 1 April 2025 and 31 March 2027, foreign purchasers are precluded from buying an established residential dwelling in Australia, unless an exemption applies. This includes persons with temporary visas and foreign-owned companies.

A foreign person is defined in s 4 of the Foreign Acquisitions and Takeovers Act 1975. See Guidance Note 2 Key Concepts published by The Treasury for further information. A foreign person can include individuals, corporations, trusts, and other entities.

The ban does not apply to newly constructed or off-the-plan properties. However existing restrictions for foreign purchasers continue to apply.

The ban applies to individuals holding temporary visas, who were previously allowed to purchase existing dwellings if they studied or worked in Australia and were approved by the Foreign Investment Review Board (FIRB). Such applications to the FIRB will no longer be approved.

Where a foreign purchaser has a Foreign Investment Review Board approval or exemption certificate issued before 1 April 2025, they can rely on it.

Exemptions

Exemptions to the ban mean that purchases are permitted:

  • by permanent residents;
  • by New Zealand citizens;
  • by spouses, as joint tenants, if one of them is an Australian citizen, permanent resident, or New Zealand citizen;
  • for investments that significantly increase housing supply or support the availability of housing supply; and
  • for properties intended for accommodation under the Pacific Australia Labour Mobility (PALM) scheme.

Issues to consider

Legal representatives need to be satisfied that foreign purchasers are aware of the consequences of contracting to buy an established dwelling if an exemption does not apply. The ATO will enforce the ban through enhanced screening of foreign investment proposals for residential properties, and penalties apply to breaches. The Government will fund the ATO from 2025-26 financial year to enforce the ban.

Publication updates

By Lawyers Conveyancing publications in all states have been updated, including the commentaries in the Purchase of Real Property guides and 1001 Conveyancing Answers. They include in-depth information on determining who is a foreign person and whether exemptions from the ban apply.

Foreign surcharge – NSW

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Foreign surcharge applies to land tax and purchaser duty on any residential land in New South Wales owned by foreign persons. A foreign person is defined in the Foreign Acquisitions and Takeovers Act 1975 of the Commonwealth, as modified by s 104J of the Duties Act 1997 (NSW).

The requirement to pay the foreign surcharge is subject to exceptions for the citizens of some countries. This arises due to New South Wales’ obligations under the foreign surcharge provisions within certain international tax treaties.

On 21 February 2023, Revenue NSW announced that citizens of New Zealand, Finland, Germany, and South Africa were no longer required to pay surcharge purchaser duty or surcharge land tax.

On 29 May 2023, Revenue NSW added India, Japan, Norway, and Switzerland as countries whose citizens are exempt from paying surcharge purchaser duty and surcharge land tax.

The exemption applies only to residential property in New South Wales, and only to natural persons. If a trust relationship exists, or a partnership or corporate entity is involved, the exemption may still apply but is not automatic.

There is a refund period for purchasers and landowners from the eight exempt nations who have already paid the surcharge purchaser duty or surcharge land tax. Transactions on or after 1 January 2021 are eligible for a refund, extending the previous refund period by six months from 1 July 2021.

The Purchase of Real Property (NSW), Sale of Real Property (NSW), and 1001 Conveyancing Answers (NSW) guides, which contain detailed commentary on surcharge purchaser duty and surcharge land tax regimes, have been updated accordingly.

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