Effective January 2023, Canada’s Federal Government put in place the “Prohibition on the Purchase of Residential Property by Non-Canadians Act”; essentially prohibiting non-Canadians from purchasing residential property in Canada.
This ban is temporary and is set to last for 2 years.
Why is it Being Implemented?
According to the government, the intent of this new policy is to relieve pressure in the housing market by limiting foreign buyers from purchasing property and therefore leaving more available for domestic purchasers. Over the last several years we have witnessed a stark increase in housing prices and this policy is also intended to temper rising housing prices. With Canada facing low housing inventory levels, theoretically this policy could have an impact on housing supply, however only time will tell as it has had mixed success in other jurisdictions that have implemented one.
If you had an Agreement of Purchase and Sale in place before January 1, 2023 then the ban should not affect you. After that date any foreign nationals who are not Canadian citizens or permanent residents will be prohibited from purchasing residential property within Canada until 2025.
Are There Exceptions to the Ban?
There are exceptions to this ban, including the following:
- buyers whose spouse or common law partner is a Canadian, permanent resident, or otherwise is not impacted
- rental dwellings with four or more units
- gifts of real property
- recreational property like cabins and some vacant land
- foreign nationals affected by death, divorce, or separation
- secured creditors
- temporary residents who work or study in Canada and plan to stay
- foreign diplomats and consular officials living in Canada or people fleeing conflict and refugees
Please note, this is not a complete list; there may be other exceptions not listed here so be sure to check if any apply to your unique situation.
Anyone who defies the foreign buyer ban or anyone caught assisting them will face a very hefty fine of $10,000.
For further information visit the government of Canada website at https://laws-lois.justice.gc.ca/eng/regulations/SOR-2022-250/page-1.html
If you are planning to buy or sell real estate be sure to discuss any implications the Foreign Buyer Ban may have on your purchase or sale with your realtor and/or legal counsel.
