Rules for foreigners buying property in Australia in 2025

Authored by the expert who managed and guided the team behind the Australia Property Pack

Everything you need to know before buying real estate is included in our Australia Property Pack

As of June 2025, Australia has implemented significant restrictions on foreign property purchases.

The Australian government introduced a two-year ban on foreigners buying established residential properties, effective from April 1, 2025, through March 31, 2027. This comprehensive guide answers the most critical questions foreign buyers need to know about purchasing property in the Australian residential market.

If you want to go deeper, you can check our pack of documents related to the real estate market in Australia, based on reliable facts and data, not opinions or rumors.

Who is the author of this content?

BAMBOOROUTES

A team specialized in real estate investing in APAC countries (Japan, Thailand, Indonesia, Australia, etc.).

We are a team of financial experts, legal professionals, developers, and local real estate specialists dedicated to helping people like you avoid mistakes when investing in real estate in a foreign place, particularly in Australia. If you'd like to learn more about us, you can check our presentation page.

What are the exact rules for foreigners wanting to buy property in Australia in 2025?

Foreign persons face a complete ban on purchasing established residential dwellings in Australia from April 1, 2025, to March 31, 2027.

Foreign persons, including temporary residents and foreign-owned companies, cannot buy any existing houses, apartments, or townhouses that have been previously occupied. However, they can still purchase new dwellings that have never been occupied, near-new dwellings with minimal occupation history, and off-the-plan properties before construction completes. Vacant residential land remains available for foreign buyers, provided they commence construction of a new dwelling within 4 years of purchase.

All foreign purchases require Foreign Investment Review Board (FIRB) approval before proceeding with any property transaction. The approval process is mandatory and must be completed before signing any binding contracts or agreements. Permanent residents and New Zealand citizens enjoy full exemption from these restrictions and can purchase any property type without requiring FIRB approval.

Foreign buyers can also purchase established properties specifically for redevelopment purposes, but only when the project will significantly increase housing supply, such as demolishing one house to build multiple apartments. The government designed these rules to ensure foreign investment contributes to increasing Australia's housing stock rather than reducing availability for local buyers.

What recent changes came into effect and when?

The Australian government implemented major changes to foreign property investment rules on April 1, 2025.

The most significant change is the complete prohibition on foreign purchases of existing homes, scheduled to run until March 31, 2027. FIRB application fees increased substantially, particularly for exceptional cases where foreign buyers seek special consideration. The government doubled vacancy fees for properties left empty for more than 6 months, targeting foreign investors who leave properties unoccupied.

The Australian Taxation Office and Treasury significantly enhanced compliance measures, increasing audits on foreign-owned properties to prevent "land banking" practices. The government announced these sweeping changes in February 2025, providing foreign buyers just two months to adjust their investment strategies before implementation.

Why did the Australian government introduce these restrictions?

The Australian government implemented these restrictions primarily to address the severe housing affordability crisis affecting local buyers.

With median house prices in Sydney exceeding AUD 1.5 million and Melbourne surpassing AUD 1 million, the government determined that foreign investment was contributing significantly to pricing out Australian residents from the property market. The restrictions aim to reduce competition between foreign buyers and local residents for existing homes, potentially easing upward pressure on housing prices across major cities.

The second major objective targets the practice of "land banking," where foreign investors purchase properties or land without developing them. This practice effectively removes housing stock from the market, exacerbating supply shortages in cities already experiencing housing crises. The government wants to ensure that any foreign investment in Australian property markets contributes to increasing housing supply rather than reducing availability.

By implementing these restrictions, policymakers hope to rebalance the property market in favor of Australian residents while still allowing foreign investment that creates new housing. The two-year timeframe provides an opportunity to assess the effectiveness of these measures before deciding on permanent policy changes.

It's something we develop in our Australia property pack.

What property types are foreigners banned from buying, and what are the exceptions?

Foreign buyers face a complete ban on all established residential dwellings, regardless of intended use.

The ban encompasses all previously occupied houses, apartments, and townhouses, whether purchased for investment or as a principal residence. This prohibition applies uniformly across all property values and locations throughout Australia, with no exemptions based on property price or buyer circumstances during the ban period.

However, several important exceptions allow foreign buyers to participate in specific segments of the property market. Foreign investors can purchase established properties for redevelopment projects that result in a net increase in dwellings, such as buying one house to build four apartments. Properties purchased under the Pacific Australia Labour Mobility (PALM) scheme for worker accommodation receive exemption from the ban.

Joint purchases with Australian citizens, permanent residents, or New Zealand citizen spouses remain possible when buying as joint tenants. Additionally, permanent residents, New Zealand citizens, and certain diplomatic personnel are not considered "foreign persons" under these rules and face no restrictions.

These exceptions ensure that foreign investment can still contribute to increasing housing supply while preventing competition for existing housing stock.

Will the government extend the ban or ease restrictions later in 2025?

The Australian government shows no indication of relaxing the foreign buyer ban before its scheduled end date.

The government has committed to conducting a comprehensive review before March 31, 2027, but as of mid-2025, officials maintain their firm stance on the full two-year restriction period. Housing Minister statements emphasize that any decision about extending or modifying the ban will depend entirely on measurable improvements in housing affordability and supply metrics.

Property market analysts suggest the ban may extend beyond 2027 if housing affordability hasn't improved sufficiently. The government has indicated that further limitations could be introduced if current restrictions don't achieve desired results in cooling property prices and increasing housing availability for Australian residents. Key factors in the review will include housing supply data, price trend analysis, and assessment of the ban's effectiveness in achieving policy objectives.

Foreign buyers should plan investment strategies assuming the full two-year restriction period remains in place. Market observers recommend against expecting early relief or policy softening, as political pressure to maintain or strengthen restrictions remains high given ongoing affordability concerns.

Don't lose money on your property in Australia

100% of people who have lost money there have spent less than 1 hour researching the market. We have reviewed everything there is to know. Grab our guide now.

Download Now

How do rules differ for permanent residents, temporary visa holders, and non-residents?

Australian property laws create three distinct categories of foreign buyers with significantly different rights and restrictions.

Permanent residents enjoy the same property rights as Australian citizens, facing no restrictions on property types and requiring no FIRB approval for any purchases. They can buy established homes, new properties, or vacant land without additional requirements or foreign buyer surcharges, making them effectively domestic buyers under Australian law.

Temporary visa holders and non-residents face identical restrictions during the ban period, unable to purchase established properties regardless of their visa type or duration. Both groups must obtain FIRB approval for any permitted purchases and face all foreign buyer surcharges. The key difference is that temporary visa holders must sell any property they own if they leave Australia permanently, while non-residents can maintain ownership from overseas.

What properties can foreigners still legally purchase and under what conditions?

Foreign buyers retain access to several property categories despite the ban on established homes.

New dwellings form the primary opportunity for foreign investment, including properties that have never been occupied or sold as residences. These include apartments in newly completed buildings and house-and-land packages in development areas. Off-the-plan properties remain particularly popular, allowing foreign buyers to purchase before or during construction, with many developers specifically marketing these opportunities to international investors.

Vacant residential land provides another avenue for foreign investment, but buyers must commence construction within 4 years of purchase. Construction must be continuous with prompt completion, and failure to build results in forced sale and significant penalties. This requirement ensures foreign land purchases contribute to housing supply rather than speculation.

House and land packages combining vacant land with new home construction contracts offer a streamlined option. These packages must use registered builders and remain popular in growth corridors around major cities like Sydney, Melbourne, and Brisbane. Foreign buyers can also purchase established properties for redevelopment, but only when creating multiple dwellings from a single property, requiring detailed development applications demonstrating net increases in housing supply.

All purchases require FIRB approval before proceeding, regardless of property type or value.

Are there location-specific rules or extra requirements in different states?

Each Australian state and territory imposes additional costs and requirements on foreign buyers beyond federal restrictions.

New South Wales and Victoria lead with 8% stamp duty surcharges for foreign buyers, while Queensland, Western Australia, and South Australia charge 7%. Tasmania matches NSW and Victoria at 8%. Annual land tax surcharges vary significantly, with NSW and Victoria charging 4%, Queensland at 2%, South Australia at 2%, and Tasmania at just 0.5%, while Western Australia imposes no annual surcharge.

Capital cities implement varying enforcement approaches, with Sydney maintaining the highest compliance scrutiny, especially in premium suburbs. Melbourne strictly enforces vacancy fees in inner suburbs, while Brisbane focuses on preventing land banking in growth areas. Perth enhances monitoring of mining-related foreign investment, reflecting its resource-driven economy.

It's something we develop in our Australia property pack.

What's involved in the FIRB approval process - timeline and costs?

The FIRB approval process requires careful planning and substantial fees based on property value.

Foreign buyers must submit online applications before signing any binding contracts, providing detailed personal and financial information, declaring intended property use, and paying non-refundable application fees. The fee structure scales dramatically with property value, starting at AUD 4,000 for properties under AUD 1 million and reaching AUD 40,700+ for properties exceeding AUD 5 million.

Standard cases receive decisions within 30 days from complete application submission, while complex cases may require up to 90 days. FIRB may grant conditional approval with specific requirements that buyers must fulfill. Approvals typically remain valid for 12 months to complete the purchase, and buyers cannot exchange contracts until receiving FIRB approval.

Each approval is property-specific, requiring new applications for different properties. False declarations result in criminal penalties, making accurate information crucial throughout the process.

We did some research and made this infographic to help you quickly compare rental yields of the major cities in Australia versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.

What fees, taxes, and extra costs apply specifically to foreign buyers?

Foreign buyers face substantially higher costs than Australian residents, often totaling 15-20% above the purchase price.

Upfront costs begin with non-refundable FIRB application fees ranging from AUD 4,000 to over AUD 40,700. Foreign buyer stamp duty surcharges of 7-8% apply on top of standard stamp duty rates of 3-5.5%, creating a combined stamp duty burden often exceeding 12% of purchase price. Legal fees typically run AUD 2,000-5,000, often higher for foreign buyers due to additional complexity, while foreign exchange fees add 1-3% when converting currency.

Annual ongoing costs include foreign owner land tax surcharges of 0.5-4% of land value, varying by state. Properties left empty for more than 6 months incur vacancy fees starting at AUD 5,000 annually, doubling each consecutive year of vacancy. Property management fees of 5-7% apply to rental income if leasing the property.

Exit costs prove particularly expensive for foreign sellers, with capital gains tax at 32.5% for non-residents without any tax-free threshold. The Australian Taxation Office withholds 12.5% of the sale price automatically, requiring buyers to apply for refunds if tax liability is lower. Real estate agent fees typically range from 2-3% of sale price.

For a AUD 1 million property in NSW, total upfront costs reach approximately AUD 127,000, representing 12.7% above purchase price before considering ongoing annual charges.

What's the best strategy for eligible foreign buyers in 2025?

Success in the restricted Australian property market requires strategic planning and careful execution.

Off-the-plan properties offer the best opportunities for foreign buyers, allowing them to lock in current prices before construction while developers often provide incentives specifically for international purchasers. Payment staging over the construction period helps manage cash flow, and targeting areas with planned infrastructure development maximizes capital growth potential.

Growth corridors around major cities provide better value and development potential. Western Sydney growth areas, Melbourne's northern and western suburbs, and Brisbane's southern corridors offer compelling opportunities. These areas typically feature new infrastructure, growing populations, and more affordable entry points compared to established inner-city locations.

Strategic partnerships can provide additional options, including forming joint ventures with Australian citizens or permanent residents, exploring corporate structures with local partners, or considering trust arrangements with appropriate legal advice. Timing proves crucial - start FIRB applications immediately upon property selection, budget 6-8 weeks for complete approval, monitor exchange rates for optimal currency conversion, and track state budget announcements for potential surcharge changes.

Maximizing returns requires choosing properties in high-rental-demand areas to avoid vacancy fees, particularly near universities for student accommodation, close to major employment hubs, or in locations suitable for furnished rentals commanding premium rents.

It's something we develop in our Australia property pack.

What are the most common pitfalls foreigners make when buying Australian property?

Understanding common mistakes helps foreign buyers avoid costly errors and legal complications.

The most serious error involves attempting purchases without FIRB approval, resulting in forced sale within 12 months plus criminal penalties up to AUD 157,500. Many buyers misunderstand the established property ban, incorrectly believing exceptions exist for investment properties when the ban remains absolute regardless of intended use.

Financial planning failures plague many foreign buyers who underestimate total costs. The common oversight of forgetting the 7-8% foreign buyer surcharge leads to inability to complete purchases or depleted investment funds. Successful buyers budget for 15-20% above purchase price to cover all associated costs.

Vacant land purchases create specific risks when buyers ignore development requirements. Failing to build within the mandatory 4-year timeframe results in forced sale and penalties. Having confirmed builders and approved plans before land purchase prevents this expensive mistake.

Professional representation proves crucial, as using agents or lawyers unfamiliar with foreign buyer rules leads to missing critical requirements or deadlines. Engaging specialists in foreign investment property ensures compliance with complex regulations. Currency timing mistakes when converting large sums during unfavorable exchange rates significantly impact investment returns - using forward contracts or staged conversions provides protection.

Vacancy fee violations catch many overseas investors who leave properties empty, incurring AUD 5,000+ annual fees that double each year. Ensuring continuous tenancy or regular occupation prevents these escalating charges.

Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.

Sources

1. Foreign Investment Review Board
2. Australian Taxation Office
3. Treasury Ministers Media Release
4. Real Estate Institute Queensland
5. ATO Foreign Investment Guidelines