Victoria to waive 4% absentee surcharge on sites being built

The Victorian Government has announced it will exempt some developers from the Absentee Owner Surcharge, which would cut the holding cost of foreign-owned sites during and after construction. The changes are announced, not yet law. The release gives no start date and does not say whether legislation is needed.

For a Victorian developer with an overseas parent or foreign investors in the structure, the surcharge sits on top of ordinary land tax every year the site is held. The proposal targets that carrying cost on sites that are being built.

Why it matters

The Premier’s release of 14 October 2026 sets out three changes. Developers who build affordable housing would be exempt from the surcharge during construction if they meet the Development Facilitation Program’s criteria. Residential developments could be exempt for up to two years after construction is complete.

The third change formalises a one-year post-construction exemption for the sale of land, regardless of land type. The release says guidelines will be updated so developers who build affordable housing are recognised for their economic contribution.

The practical effect is on foreign-capital projects that finish and then sit unsold or untenanted. Today, once a development is complete, the owner is treated as a passive investor and the surcharge can apply. The two-year window would give completed residential stock time to sell or settle before the tax returns.

The numbers

The release contains no rate or dollar figure. The State Revenue Office lists the surcharge at 4% of the total taxable value of Victorian land, applied from the 2024 land tax year. It was 2% from 2020 to 2023.

The surcharge applies to absentee owners on 31 December and is charged in the following land tax year. It does not apply where total taxable land value is below $50,000. Australian citizens and permanent residents living overseas are not covered.

The SRO already allows some build-to-rent developments an exemption under the Treasurer’s guidelines while the project is underway. That exemption ends on completion. The new announcement would extend relief past completion for residential projects and for land sales, but only on the terms in the release.

On a site with a $50 million taxable land value, 4% is $2 million a year. That figure is our arithmetic from the SRO rate, not a number in the announcement, and actual bills depend on the landholding and any other land tax components.

What’s next

Three things are unconfirmed. The release does not state when the exemptions would start. It does not say whether they need an amendment to the law or can be delivered through the Treasurer’s guidelines. And it does not set out the Development Facilitation Program criteria a developer must meet to qualify.

Until the guidelines are published, developers with absentee owners should treat the changes as a signal, not a basis for holding-cost modelling. Exemptions under existing guidelines still require detailed documents on the business, ownership structure and local operations, according to the SRO.

Treasurer Colin Brooks said the aim is “more certainty for builders so that the pipeline of housing continues to grow for first home buyers.” Watch for updated Treasurer’s guidelines or a bill, either of which would show the start date.

More Victorian policy and development coverage is on the Melbourne market page.