Ban on foreign purchases of established dwellings & vacant land review
The Federal Government has placed a two-year hold on foreign purchases of existing developed property. While Foreign investment currently represents less than 2% of housing transactions annually, this move forms part of a wider group of ‘Homes for Australia’ initiatives.
The initiative is designed to support increased housing supply.
From 1 April 2025, temporary residents and foreign-owned companies will be ineligible to purchase existing dwellings in Australia.
Foreign Investors who have secured Foreign Investment Review Board (FIRB) approval and entered into a binding contract before April 1, 2025, are not affected by the ban, even if the settlement occurs after this date.
Exceptions are limited
This ban applies until 31 March 2027 to all foreign persons unless they are eligible for an exception. An extension beyond two years is also being considered.
Prior to the ban, foreign investors could purchase existing property if they were working or studying in Australia. The ban extends to cover these scenarios.
Exceptions include:
- Investments that significantly increase housing supply or support the availability of housing supply.
- The Pacific Australia Labour Mobility (PALM) scheme.
Other exceptions are permanent residents, New Zealand citizens, spouses of Australian citizens, permanent residents or New Zealand citizens (when purchased as joint tenants).
Land Banking Scrutiny
Land banking by foreign investors is also under Government review. Land banking is when large parcels of land are purchased only to be held until prices rise, then sold for profit. This strategy delays the development of residential housing on land. All foreign investors will need to comply with development conditions to ensure the land becomes productive within reasonable time frames.
Homes for Australia
The ‘Homes for Australia’ plan will provide AU$32 billion in funding and incentives to encourage states and territories to boost the housing supply. Another initiative in discussion is to broaden the scope for banks to exclude HELP debt in home loan assessments.
A home for you?
Housing affordability and rising state property taxes remain front of mind for many Australians.
For those looking to purchase a residential home or secure a commercial property, an experienced finance broker can assist in navigating these changes and work with you to create a plan for your scenario.
Contact MCP
1300 510 816 or your Finance Partner
enquiry@mcpfinancial.com.au
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The team at MCP Financial Services has specialised expertise in structuring complex debt arrangements. We can assist with review and restructuring, refinancing and renegotiating.