Foreign Investment Rule Changes 2026: What It Means for the Victorian Market
The Scene
You are living in Melbourne on a skilled visa. You have a great job.
You want to buy a beautiful, established family home in Balwyn.
You go to the auction. You win. You sign the contract.
On Monday, your conveyancer calls. “You are not an Australian citizen. Under the 2026 rules, you are banned from buying this house.”
You lose the house. You might lose your deposit.
Welcome to the new era of Australian real estate. The Federal Government has radically changed the rules for overseas buyers, expats, and temporary residents.
Here is the truth about what foreign investors can and cannot buy in Victoria in 2026.
1. The 2-Year Ban on “Established” Homes
This is the biggest shock to the market.
From April 2025 to March 2027, the Federal Government has placed a strict ban on foreign buyers purchasing established (existing) residential properties.
Are you a temporary visa holder (like a 482 skilled worker or a student visa holder)? You are caught in the net.
The government wants foreign money building new homes, not competing with locals for existing ones. If the house has been lived in before, you generally cannot buy it.
2. The 8% Victorian Surcharge (FPAD)
The Federal ban is step one. The Victorian State Revenue Office is step two.
If you buy property in Victoria as a foreign purchaser, you must pay the Foreign Purchaser Additional Duty (FPAD).
This is a massive 8% surcharge on top of the standard stamp duty.
Buy a $1 million property? You pay approximately $55,000 in normal duty, PLUS an $80,000 foreign surcharge.
The NZ Trap: In 2026, even New Zealand citizens on Special Category Visas must prove they have lived in Australia for 6 continuous months, or they get hit with this 8% tax.
3. The “Land Banking” Crackdown
You bought vacant land three years ago with Foreign Investment Review Board (FIRB) approval.
You haven’t built anything yet because construction costs are too high.
Expect an audit.
In 2026, the ATO is aggressively targeting foreign “land bankers.” If you do not meet the development conditions of your FIRB approval (which usually require construction within 4 years), the government can force you to sell the land and issue massive financial penalties.
4. The Solution: What CAN You Buy?
It is not all bad news. The government still wants foreign investment to boost the economy.
Foreign investors are legally encouraged to buy:
New Dwellings: Brand new apartments or townhouses that have never been lived in.
Off-The-Plan: Buying a property before construction finishes.
Vacant Land: (Provided you actually build a new dwelling on it within the required timeframe).
By purchasing these, you add to the housing supply, and FIRB approvals are actively processed.
The Verdict
Buying property as a non-citizen in 2026 requires navigating a strict federal ban and a massive state tax surcharge. If you sign a contract without a FIRB review, you are risking financial disaster.
Our Advice:
1. Check Your Visa: Permanent Residents are generally exempt from the ban. Temporary residents are not. Know your exact legal status.
2. Add a FIRB Clause: Never sign an unconditional contract at auction. You must include a “Subject to FIRB Approval” special condition.
3. Calculate the 8%: Always factor the 8% Victorian FPAD into your budget before you make an offer.
At Prime Legal Conveyancing, we guide foreign buyers and expats through the complex FIRB and SRO tax maze safely.
Buying on a visa? Email us the contract before you bid.
