Starting in January 2023, non-Canadians will be banned from buying homes across Canada, through the Prohibition on the Purchase of Residential Property by Non-Canadians Act. This Act prohibits non-citizens and non-permanent residents from purchasing residential property in Canada for two years.
The Act also restricts non-Canadians from avoiding the ban by using corporations or other entities to purchase residential property. Both the non-Canadian purchaser of the prohibited property and any person or entity that knowingly assists in the purchase can be fined up to $10,000 and the property may be forced to be sold.
“Residential property” includes detached houses or similar buildings of one to three dwelling units, as well as parts of buildings such as semi-detached houses, strata units or other similar premises.
How does the Foreign Buyer Ban Impact REALTORS®?
REALTORS®, along with lawyers and notaries, owe their clients an obligation to inform. The legislation does not rely on REALTORS® to enforce the prohibition, however it does allow for penalties to be imposed on any party found guilty of knowingly assisting a non-Canadian in violating the prohibition.
At this point, there is still lots that we do not know about the Act, because details have not been announced through regulation. There may be exemptions for certain groups of people, types of residential property and special circumstances, but these have not yet been established. Also, it is still unclear what is meant by “control” and what is considered “purchase” within the Act. The final regulations are intended to be published later this fall.
Although it is uncertain, we anticipate exemptions will be put in place for:
- recreational properties,
- residential property located outside of a large urban centre,
- vacant land where the land has been zoned for residential use or mixed use by municipal authorities within large urban centres,
- Indigenous peoples,
- international students on the path to permanent residency,
- individuals with work permits residing in Canada,
- individuals fleeing international crises and other vulnerable populations, and
- accredited members of foreign missions in Canada.
BCREA is concerned that this policy will create obstacles for homeownership for newcomers and can interfere with Canada’s ability to attract immigrants. The policy is at odds with the federal government’s own immigration targets, as the aim to welcome 465,000 next year. Even if a person is not a Canadian resident, they are still able to contribute to Canada’s economy and communities.
BCREA supports the Canadian Real Estate Association’s (CREA) advocacy for additional exemptions, including:
- Americans and Mexicans through the Canada-United States-Mexico Agreement. This exemption would avoid a reciprocal response from Canada’s trading partners that could harm Canadians. A US Congressman has already warned that if Canada were to target foreign owners of real property in the United States, there may be reciprocal policies implemented.
- areas where existing measures are in place. This would include the many areas in BC that are subject to the Speculation and Vacancy Tax, whereby non-Canadians are subject to an additional 20 per cent property transfer tax in specified areas, and
- established dwellings for redevelopment, provided they increase housing stock.
CREA also asked that the federal government take into consideration the compliance burden of implementation and the recognition that housing needs vary across the country.