Ban on Foreign Buying in Canada

The Government of Canada has passed a new law to help make homes more affordable for people living in Canada. The Prohibition on the Purchase of Residential Property by Non-Canadians Act prevents non-Canadians and corporations controlled by non-Canadians from purchasing residential property in Canada for 2 years.

In developing the accompanying regulations, the Government reached out to Canadians for their feedback. A detailed consultation document containing specific policy proposals intended for the regulations was available for comment for 4 weeks in August and September 2022. The consultation process received approximately 200 written submissions from individuals and stakeholders.

The Regulations came into full force on January 1, 2023. The Act and its regulations will be repealed after 2 years thereafter. 

Who or what is Exempt?

Exceptions exist for international students, and/or temporary residents, specifically exempted foreign nationals and refugee claimants, subject to varying conditions, such as tax filing and residency obligations.Properties located outside of a Census Metropolitan Area (CMA) or a Census Agglomeration (CA) are excluded from this prohibition.

An order requiring the residential property to be sold may be sought if certain conditions are met, namely the non-Canadian is the owner at the time the order is made, and notice requirements have been met.

Certain aspects of the Foreign Buyers Ban still lack clarity, including the exemptions. Under CREA's jurisdictional leadership, we are actively engaged in ongoing dialogue with federal policymakers, legal experts, Statistics Canada, the Canadian Mortgage and Housing Corporation and other stakeholders for clarification on the ambiguities.

For further details, please consult the regulations.

Definitions

The ban applies to “residential property,” which 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. The definition further includes “land that does not contain any habitable dwelling, that is zoned for residential use or mixed-use, and that is located within a census agglomeration or a census metropolitan area, is a prescribed real property or immovable.”“Non-Canadian” as it relates to corporations and other entities, refers to:

• “an entity formed otherwise than under the laws of Canada or a province;" and
• an entity formed under Canada’s laws that has direct or indirect ownership by a non-Canadian of 3 percent or more of the value of the entity’s equity or voting rights.

“Purchase” is defined as “the acquisition, with or without conditions, of a legal or equitable interest or a real right in a residential property,” with the exception of, among other things, acquisitions of interests resulting from transitional or life events such as death, divorce, separation, or a gift.

The Act restricts non-Canadians from avoiding the ban by using corporations or other entities to purchase residential property.“Control” with respect to a corporation or entity, means:

• “direct or indirect ownership of shares or ownership interests of the corporation or entity representing 3 percent or more of the value of the equity in it, or carrying 3 percent or more of its voting rights;" or
• “control in fact of the corporation or entity, whether directly or indirectly, through ownership, agreement or otherwise.”

Credits & Source of Information:

BCREA