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Victorian $5bn investor tax scrapped
The Victorian government will cut a property tax setting that has seen investment halve over a three-year window, costing the state billions.
The Victorian government has announced plans to cut the absentee owner surcharge (AOS) for developments and extend it to post-construction.
The surcharge, introduced in 2016, adds an extra 4 per cent fee to foreign investors who do not reside in Victoria, and will be slashed to attract investment back to the state.
According to a late-2025 report by the Property Council, the state lost more than 50 per cent of investment, valued at an estimated $5 billion.
As part of the changes, the guidelines will be updated to exempt developers who build affordable housing from the surcharge, provided they meet the state’s Development Facilitation Criteria for an expedited construction pathway.
Under the updated guidelines, developments can be exempt from AOS for up to two years post-construction, giving developers more time to sell and lease
Victorian Treasurer Colin Brooks said the changes would give developers and foreign investors the certainty they need to return to the state.
“Victoria is building and approving more homes than any other state, but there’s more to do,” Brooks said.
Property Council Victorian executive director Cath Evans said the move was a step in the right direction, but more substantial action was needed to restore investor confidence in the state.
She said the government’s response was a belated action to the impact the state’s tax settings had had on investment and housing delivery.
“Anything that helps open the door to more capital coming into Victoria is important. We need that investment to build homes, workplaces and infrastructure our state urgently needs,” Evans said.
“However, this isn’t just about housing. Restoring Victoria’s economic competitiveness requires a broader focus on the commercial sector, which was notably absent from today’s announcement.”
Evans said the doubling of the AOS in 2023 had a significant long-term impact on the state’s economy.
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She said the state could not afford to keep losing out on foreign investment.
“We need more substantial commitments from all parties to address our uncompetitive property tax settings, restore investor confidence and make it easier to deliver the homes, workplaces and infrastructure our growing state needs.”
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