NEW YEAR, NEW BAN ON FOREIGN HOMEBUYERS
On Jan. 1, the Government of Canada’s Prohibition on the Purchase of Residential Property by Non-Canadians Act came into effect.
The new law aims to prevent non-Canadians and corporations controlled by non-Canadians from purchasing some, but not all, residential property in Canada in 2023 & 2024.
The Federal Government hopes the Act will expand real estate supply and make homes more affordable for Canadians.
But considering the law’s geographic restrictions and its plentiful list of exemptions (both outlined below), I predict the impact on Canada’s housing market will be very limited.
Another last-minute addition to the guidelines is problematic and unfair to those folks on work permits. A new restriction requires buyers on a work permit must wait at least three years to purchase a home, and the buyer must show three years Canadian tax returns to qualify. Our government will let folks into the country to work, pay taxes, but must wait at least three years to buy a house. We are trying to determine if this restriction applies outside the restricted geographic area. Hmmm.
Here is when, where and how the law applies.
Where does the ban on foreign homebuyers apply?
The new Act applies to residential properties in a census metropolitan area or a census agglomeration as defined by Statistics Canada 2021. These areas are:
Census Metropolitan Areas (A-Z)
Abbotsford-Mission Kelowna Saguenay
Barrie Kingston Saint John
Brantford Lethbridge Sherbrooke
Calgary London St Catharines - Niagara
Chilliwack Moncton St. John's
Drummondville Montreal Thunder Bay
Edmonton Nanaimo Toronto
Fredericton Oshawa Trois-Rivieres
Greater Sudbury Ottawa-Gatineau Vancouver
Guelph Peterborough Victoria
Halifax Quebec Windsor
Hamilton Red Deer Winnipeg
Kamloops Regina
Census Agglomerations (A-Z)
Granby North Bay Sarnia
Grande Prairie Prince George Sault Ste Marie
Medicine Hat Saint Hyacinthe Wood Buffalo
To which property types does the ban apply?
The prohibition on foreign buyers applies only to residential properties as described below.
The Act defines residential property as buildings with three homes or less, as well as parts of buildings like a semi-detached house or a condominium unit. Examples of such residential properties include:
- Detached homes or similar buildings
- Semi-detached homes, rowhouse units, residential condo units or similar unit types
- Vacant land that is zoned for residential or mixed use
The law does not prohibit the purchase of properties with 4 or more residential units.
The ban also does not seem to apply to Type A or B vacation properties, such as cottages, vacation homes, or lake houses.
Which non-Canadians might be exempt from the ban?
Certain criteria must be met in all the below scenarios. To see the full list of exemption criteria, visit cmhc-schl.gc.ca.
Which non-Canadians might be exempt from the ban?
Certain criteria must be met in all the below scenarios. To see the full list of exemption criteria, visit cmhc-schl.gc.ca.
- Those in Canada with temporary work permits, note new three-year requirement
- International students
- Refugees and refugee claimants fleeing international crisis
- Accredited members of foreign missions to Canada
- Non-Canadians with a spouse or common law partner who is a Canadian citizen, permanent resident, person registered under the Indian Act, or a refugee
What documentation can non-Canadians use to show they are exempt?
Non-Canadians can show the following documents to demonstrate compliance. These proof points may be required in a mortgage application
- Work or study permit
- Verification of status issued by Immigration, Refugees and Citizenship Canada
Other documents that show they live in Canada (for example, rental agreements, utility bills, or records of travel in and out of the country)