Canada Foreign Buyer Ban – Effective Today – Jan 01, 2023

Starting today, the Canada Foreign Buyer Ban is in effect for next 2 years.

Foreign buyers (non-canadiens) will be banned from buying homes across Canada through federal Government legislation known as the “Prohibition on the Purchase of Residential Property by Non-Canadians Act”. Under the Act, non-citizens and non-permanent residents will be prohibited for two years from purchasing residential property in Canada. 

What happens with Purchases Made in 2022 that Close after Jan 1 2023 ?

The Canadian Real Estate Association has advised Boards and Associations that – if a non-Canadian has entered into an agreement of purchase a relevant property on December 31, 2022 or sooner, the prohibition would NOT apply to that transaction. According to CREA, the Act suggests the prohibition applies only to agreements of purchase and sale entered into after today, January 1, 2023, coming into force date.

Important note

This blog post, as all other on this website, are intended for educational purposes only and are not to be substituted for legal advice. With respect to individual situations relating to your business, it’s important to remember that the legislation may be complicated to interpret. It’s always a good idea to consult a lawyer for specific advice or guidance.

Does it affect only ‘purchased’ properties?

Here are some applicable exceptions to consider

• the acquisition by an individual of an interest or a real right resulting from death, divorce, separation or a gift;
• the rental of a dwelling unit to a tenant for the purpose of its occupation by the tenant;
• the transfer under the terms of a trust that was created prior to the coming into force of the Act
• the transfer resulting from the exercise of a security interest or secured right by a secured creditor.

What exception temporary residents have?

There are also exception to temporary residents,  temporary resident must satisfy one of the following conditions:

•  Students that are officially enrolled in a program of authorized study at a designated learning institution, can purchase ONE residential property that does not exceed $500,000 CAD, only if specific requirements on Tax filling and presence in Canada are met.
• Temporary residents who worked in Canada for a minimum period of three years within the four years preceding the year, can purchase ONE residential property, only if specific requirements on Tax filling and presence in Canada are met.
• Foreign nationals who hold a passport that contains a valid diplomatic, consular, official or special representative acceptance issued by the Chief of Protocol for the Department of Foreign Affairs, Trade and Development;
• Foreign nationals, with valid temporary resident status, whose temporary resident visa was issued, or temporary resident status was granted.
• Persons that have made a claim for refugee protection, if that claim has been found eligible and referred to the Refugee Protection Division

According to Canadian Housing Statistics Program in 2020 (the most recent year available)  2-6% of residential properties had at least one non-resident owner. 

Unfortunately, modelling that might show the ban’s potential impacts on the housing market and prices are not included in the presented regulations.

What other countries have previously implemented a similar ban?

One of the examples is New Zealand. In New Zealand’s 2018 ban, 2.9 per cent of homebuyers were non-residents, their number has since dropped to 0.4 per cent.

Source: Prohibition on the Purchase of Residential Property by Non-Canadians Regulations: SOR/2022-250