Treasurer Colin Brooks announced the change on October 14, as part of the government's "Build Affordable Homes, Pay Less Tax With Labor" package. Developments approved under the Development Facilitation Program, which fast tracks projects worth at least $50 million in metropolitan Melbourne or $15 million in regional Victoria, will be exempt from the Absentee Owner Surcharge while under construction. The exemption extends up to two years after completion for residential developments that still need to sell or lease stock, and one year after settlement for land sales.
Labor has also committed, if returned at the November 28 election, to review both the Absentee Owner Surcharge and the 8 per cent Foreign Purchaser Additional Duty, covering how the duty is collected, its effect on foreign investment in residential construction, and its interaction with first home buyers. Updated Development Facilitation Program guidelines are due before the government enters caretaker mode on November 3.
"These changes are simple: build affordable homes and under Labor you pay less tax," Brooks said. "This is about providing more certainty for builders so that the pipeline of housing continues to grow for first home buyers."
The relief is narrow. It applies only to developments that have secured Ministerial approval under the Development Facilitation Program, not to detached housing or projects outside that scheme. Victoria's broader housing task is large by comparison: the state is targeting 800,000 new homes over ten years, against annual completions running near 55,000 against an estimated need closer to 80,000.
Industry reaction has been mixed. The Housing Industry Association welcomed the direction but said the measure alone would not be enough to make medium and high density projects feasible. HIA's Keith Ryan said government taxes, charges and regulatory costs already account for more than 40 per cent of the cost of a typical Melbourne house and land package, and said the scheme needed more detail on whether the surcharge is being cut or only reduced, and on what will count as affordable. The Property Council welcomed the flagged review but is pushing for broader reform, pointing to an estimated $5 billion in lost development activity since the Absentee Owner Surcharge was doubled in 2023.
For agents and principals working with developers on medium and high density projects, the practical question is eligibility. The Development Facilitation Program's cost thresholds and Ministerial sign off mean most residential developments will not qualify, and the promised review of the wider surcharge and foreign purchaser duty remains contingent on the election outcome. Agencies with offshore buyer clients or developer relationships should treat this as a signal of direction rather than a settled policy, and watch for the updated program guidelines before caretaker mode begins.
This article was independently written and edited by Real Estate Today. © Real Estate Today 2026 – All Rights Reserved.
Real Estate Today is an independent real estate industry publication covering Australia and New Zealand.
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