Foreign investors bypassing ban through trusts

Announced in February, the Albanese government introduced a temporary ban on foreign investors purchasing existing properties in a bid to bring some relief to the housing market.

From 1 April 2025 until 31 March 2027, foreign investors (including temporary residents and foreign‑owned companies) are not able to purchase an established dwelling in Australia while the ban is in place unless an exception applies.

Now, reports have stirred that foreign investors have been using trusts to bypass the new legislation.

One Broker Daily reader reached out with a personal experience that resulted in them missing out on the purchase of a home.

“We were at the beginning of our property journey in April and we visited a great two-bedroom/two-bathroom property in Sydney. We were interested in putting in an offer, but it went way too fast,” the reader said.

“The agent called me the following Monday, telling me the property had been sold and that the buyer was in Singapore and bought it through a trust fund for someone in his family who was an Australian resident. Foreign investors still have a way to have a foot in the Australian market through trusts.”

Just a couple months after the ban was enacted, it appears foreign investors are finding loopholes.

Speaking with PRPTY360 founder Julian Fadini, he said foreign investors are “absolutely” bypassing laws through the use of trusts.

“The trust structure loopholes are real – sophisticated foreign investors are using Australian nominees, complex trust arrangements, and corporate structures to work around the FIRB (foreign investment review board) restrictions. It’s not rocket science for those with good legal advice,” he said.

This is placing extra pressure on an already undersupplied market – it’s creating fewer opportunities for Aussies and pushing prices further out of reach.

Regulation is falling short by not cracking down on trust structures. Fadini said the framework “could really do with some tightening up”.

“FIRB oversight is reactive, not proactive. There’s insufficient scrutiny of beneficial ownership in trust structures, and the penalties aren’t meaningful enough to deter sophisticated investors,” he said.

“We need real-time monitoring of foreign investment flows and stricter verification of ultimate beneficial ownership. The reality is, while politicians debate policy, hardworking Australians are getting priced out of their own market.”

While the trust structures are proving to be a great loophole for getting around the new legislation, Johnson Winter Slattery corporate lawyer Marcus Clark said there are still consequences for getting caught bypassing these laws through trusts.

He said the legislation has anti-avoidance laws. If a trust is set up to get around the rules and the foreign investor is caught, the ATO will order the perpetrator to sell the property.

This presents a big risk as stamp duty and transaction costs will still need to be paid by the investor.

Further challenges come in the form of sourcing a trustee. Foreign investors need to find an Australian to set up the trust that Clark says can be “hard to do.”

“If the same people keep turning up as the trustees, I reckon the authorities will get pretty suspicious around that pretty quickly,” said Clark.

Despite the strain it is placing on Australians, Clark said the bigger issue is developers being pushed out of the market through initiatives like the foreign investor ban and the increased taxes.

He said this is counterproductive to what the government is trying to achieve, as fewer apartments and houses are being constructed, contributing to housing supply and affordability challenges.

According to Clark, the foreign investor ban is causing more harm than good.

“The statistics of people who are foreigners who are actually buying existing residential properties, it’s very small,” he said.

“There were more houses sold in Wagga Wagga one year than there were foreign investors buying established dwellings before the prohibitions came. So, it wasn’t really creating a problem.”

With the foreign investor ban just a few months into its two-year stint, it could take longer for real trends to appear.

[Related: Foreign investors to be banned from purchasing existing homes]

Jack Campbell is the editor of Broker Daily. After graduating from the University of Wollongong in 2022, Jack began his journalistic career working on Broker Daily’s sister brand, HR Leader. In August 2023 he was made the news editor and worked alongside some talented journalists writing articles and recording podcasts.

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