Foreign investors face two-year ban on established home purchases

Labor will implement a ban on the purchase of established homes by temporary residents from April 1, mirroring a previous commitment by the Coalition.

Housing Minister Clare O’Neil will unveil the two-year ban on Sunday. Picture: NewsWire / Martin Ollman

The Albanese government will launch a crackdown on housing purchases by foreign buyers, implementing a two-year ban on the purchase of established homes by temporary residents to replicate a previous commitment by the Coalition.

The ban, to be unveiled by Housing Minister Clare O’Neil on Sunday, will take effect on April 1 and last until March 31, 2027, and will prohibit any foreign investor or foreign-owned company from purchasing an existing dwelling.

While a number of rules already restrict foreign purchases of existing housing stock, Labor’s proposed ban will also include people temporarily living in Australia, such as international students or short-stay migrant workers.

Simultaneously, the Albanese government will also conduct a review into the ban’s effectiveness to determine whether it should be extended or made permanent, with the Australian Taxation Office set to be granted $5.7m in additional funding over four years to enforce the ban.

When Peter Dutton unveiled a similar measure following the May budget last year, housing experts were generally sceptical given the proportion of foreign-bought dwellings accounts for less than 2 per cent of Australia’s total housing stock.

According to ATO data, 5360 residential and real estate purchases had a level of foreign ownership in 2022-23, amounting to fewer than 1 per cent of all transactions.

Of those purchases, just 34 per cent were established homes, with the remaining portion being either sales of vacant land or new dwellings, both of which are excluded from Labor and the Coalition’s policies so that building of new stock is not discouraged.

Also included in Labor’s announcement is an additional $8.9m over the four-year forward estimates period to expand the ATO’s ability to monitor so-called “land-banking” by foreign owners, whereby investors hold on to undeveloped land but do not develop in the time frame required by planning permits.

With soaring house prices putting home ownership out of reach for many Australians and a chronic shortage of rental properties pushing rents to near-records, the fight over housing policy has become a key battleground between the major parties in the lead up to the federal election.