Victoria to Review Foreign Investor Property Taxes

Victoria is moving to make selected foreign-investment settings more supportive of new housing development, with the State Government announcing changes to the Absentee Owner Surcharge framework aimed at giving developers and foreign investors greater certainty.

The Government announced on 14 October 2026 that it will update the rules so qualifying developers can receive relief from the Absentee Owner Surcharge during construction, provided their projects meet the Development Facilitation Program’s criteria. It also plans to allow qualifying residential developments to receive an exemption for up to two years after construction is completed, giving developers more time to sell or lease newly built properties.

The announcement is designed to encourage more investment into housing supply rather than simply reducing taxes across the board. Victoria continues to apply an 8% Foreign Purchaser Additional Duty to foreign purchasers of residential property, while the Absentee Owner Surcharge is currently 4% for affected absentee owners.

This distinction is important. The latest policy is not a general removal of foreign purchaser taxes, but it does indicate a willingness to provide targeted relief where foreign capital contributes directly to new housing development and the broader Victorian economy.

For Melbourne’s western growth corridor, this could be particularly relevant. The region contains a large pipeline of new estates, townhouses, apartments and house-and-land developments, making it one of the areas most likely to benefit if foreign-backed development becomes easier to finance and hold through the construction and sales process.

Lower holding costs for qualifying projects could improve development feasibility, especially at a time when construction costs, finance expenses and slower sales have placed pressure on builders and developers. If more projects proceed as a result, the long-term effect could be an increase in housing supply and a broader range of property options for buyers.

Foreign investors may also find new developments relatively more attractive if the tax treatment becomes more supportive during construction and immediately after completion. This would be consistent with broader Australian policy settings that seek to direct foreign capital toward creating new housing rather than competing for established homes.

For first-home buyers and owner-occupiers, more development could eventually provide greater choice. Additional apartments, townhouses and new houses can increase competition between projects and help expand the number of properties available at different price points.

For investors, however, the details will matter. Eligibility for exemptions will depend on the type of development and whether the relevant criteria are satisfied. Buyers and developers should therefore seek appropriate tax and legal advice rather than assuming all foreign-owned projects will qualify automatically.

It is also important to note that Victoria’s existing Foreign Purchaser Additional Duty remains in place at 8%. Foreign buyers still need to account for this additional duty when purchasing residential property unless a specific exemption applies.

Victoria already allows limited exemptions from foreign purchaser additional duty where a foreign-controlled entity significantly adds to the state’s housing supply through residential development or redevelopment. The latest announcement appears to build on that broader policy approach by providing additional relief through the Absentee Owner Surcharge framework.

For Melbourne’s western growth corridor, the direction of policy could therefore support greater development activity over time. If targeted tax relief improves project viability, it may encourage more capital into new housing, helping to deliver additional supply in fast-growing communities.

Overall, the changes signal that Victoria is trying to balance two objectives: maintaining foreign-investor tax settings while also using targeted exemptions to encourage projects that add new homes. For Melbourne’s west, that could mean more development activity, greater housing diversity and stronger investor interest in new-build opportunities rather than established property.