Foreign Buyer Ban

Canada has banned foreign nationals from buying homes as of January 1st 2023 and will remain in place for 2 years.

Good news! This ban does not affect permanent and temporary residents, temporary workers and international students. The ban also does not prohibit the purchase of larger buildings (high rises for example) with multiple units nor does it affect non-Canadians renting in Canada. Non-Canadians with a spouse or common-law partner who is a Canadian citizen, permanent resident, person registered under the Indian Act or refugee are also exempt.

A residential property includes: detached homes, semi-detached houses, residential condominium units (town homes/row units) and other similar property types. Those found in violation can be fined up to $10,000 and may be required to sell property they have purchased. As well, those who knowingly assist a non-Canadian with their purchase may be fined.

Further, the ban only applies to properties located in a census metropolitan area or a census agglomeration. A census metropolitan area has a population of at minimum 100,000 residents with at least 50,000 living in its core, and a census agglomeration has a core of at least 10,000 residents. Therefore smaller towns surrounding London will not necessarily be affected.

The regulations also apply to vacant land that does not have any livable dwellings but is zoned for residential or mixed use.

There is still a foreign homebuyer tax (Non-Resident Speculation Tax) in Ontario that has been in place since 2017 (and has increased over the years) sitting currently at 25% of the purchase price. (Blog post on this in greater detail to come!)

The ban stems from Bill C-19 – the Budget Implementation Act, 2022 – which was passed on June 23, 2022.

While Finance Minister Chrystia Freeland says the ban is necessary to stall inflation from further affecting Canadians’ ability to enter the real estate market or remain in it, there are also critics in the industry who do not have confidence in the outcomes of the ban (“To Ban or Not To Ban?” Storeys). Some skeptics have said there are loop holes in the justice system and time frames that would leave the likelihood of Non-Canadian citizens continuing on with residential real estate trade in Canada anyway. Other criticisms include noting how marginal Non-Canadian real estate trade is in the market, how successful the interest rate hikes have been already in tackling inflation that we have yet to see the full effects of, and a lack of effective action to boost housing supply.

RE/MAX had reported in September of 2022 that we have been (and are still currently) experiencing a housing supply crises, which is being addressed now in Ottawa in tandem with Provincial and Municipal representatives.

“Non-residents represent less than four per cent of residential property owners in most parts of Canada, including Ontario and British Columbia,” says [Anthony] Hitt [President & CEO at Engel & Völkers Americas]. “Since 2020, demand in Canada has been overwhelmingly local. While global buyers certainly do have an impact on the Canadian market, Canada’s housing supply problem is not primarily driven by international buyers. Therefore, the possible impact of the ban remains unclear” (“To Ban or Not To Ban?” Storeys).

References:

Davis, Erin Nicole. “To Ban or Not to Ban? Critics Call Canada’s Foreign Buyers Ban ‘Political Theatre’.” Storeys, 6 Jan. 2023, https://storeys.com/canada-foreign-buyers-ban-political-theatre/.

Singer, Colin R. “Canada Foreign Buyer Ban Starting In January – But Permanent and Temporary Residents Exempt.” Immigration.ca. 11 July, 2022, https://www.immigration.ca/canada-foreign-buyer-ban-starting-in-january-but-permanent-and-temporary-residents-exempt/.

Ferreira, Jennifer. “Who's exempt from Canada's foreign homebuyers ban? Here's what you need to know.” CTVNews. 3 Jan. 2023, https://www.ctvnews.ca/business/who-s-exempt-from-canada-s-foreign-homebuyers-ban-here-s-what-you-need-to-know-1.6214997.