Canada has long been considered one of the best countries in the world to live. Many rankings have confirmed this. In the US News’ The Top 25 Best Countries in the World, Canada ranked No. 3. Due to Canada’s strong economy, stable government, and high quality of life; it has attracted many foreign investments in the real estate sector.
Foreign investment in Canadian real estate is a double-edged sword if managed poorly. It can help spur economic development, increase employment opportunities in the construction industry, and growth of human resources. There are also disadvantages to foreign investment, such that real estate prices become out of reach for ordinary Canadian citizens and first-time home Buyers. For many Canadians, buying a house in Canada seems an unattainable dream.
According to the Real Estate Board of Greater Vancouver, the December 2022 MLS Home Price Index benchmark price for a detached house is $1,823,300. It would take a family in Vancouver with a median household income of $65,327 of 28 years of savings (Assuming the family doesn’t spend any money on living costs) to buy a house.
Against such high real estate prices in major Canadian cities like Vancouver and Toronto, the liberal party, in its 2021 election campaign, promised to ban foreigners from buying homes and curb speculation and house flipping.
Does such a policy help to reduce overall home prices in Canada? Yes, it could be in some way. But the cause of the exorbitant cost of homes in Canada is multifactorial. Blaming a specific group of people, in this case, foreign buyers, responsible for the increase in real estate prices seems comical and shows a lack of understanding of the complexity of this issue. Besides foreign buyers, I can think of many other factors that contributed to the high Canadian real estate prices, including the following:
- Low-interest rate
- Lack of social housing
- Outdated single-family house zoning policy
- The arduous and bureautic processes of getting a building permit at the municipal level
- Incoherent and uncoordinated housing policy at the provincial and federal level
Since the law is here to stay for at least two years, let’s see what that means for Canadian home buyers and non-residents.
FAQs about the Canada Foreign Buyer Ban
Does the foreign buyer ban impact Canadians?
The ban doesn’t impact Canadians and permanent residents.
What was the name of the bill?
The Canadian government tabled Bill C-19, Budget Implementation Act, on November 22, 2021. It received Royal Assent on June 23, 2022. Section 235 of the bill is the Prohibition on the Purchase of Residential Property by Non-Canadians Act.
What is the name of the act?
The name of the act that bans foreign buyers from buying Canadian real estate is called Prohibition on the Purchase of Residential Property by Non-Canadians Act.
When does the foreign buyer ban start?
The foreign buyer ban starts on January 1, 2023. The prohibition will last for two years.
Who can’t buy a property in Canada under this ban?
- An individual who is not a Canadian citizen, or a person not registered as an Indian under the Indian Act
- A corporation that is incorporated not under the laws of Canada or a province
- A corporation incorporated under the laws of Canada or a province whose shares are not listed on a stock exchange in Canada and controlled by a non-Canadian
Can international students buy a house in Canada?
Yes. International students can still buy real estate in Canada with certain exceptions. To buy a home in Canada, international students need to be physically present in Canada for a minimum of 244 days in each of the previous five calendar years before the purchase. Also, international students would only be able to buy property for at most $500,000.
Can a temporary resident buy a house in Canada?
Yes. Temporary residents can buy a house in Canada if they meet specific criteria.
- A temporary resident within the meaning of the Immigration and Refugee Protection Act
- A protected person within the meaning of subsection 95(2) of that Act
- An individual who is a non-Canadian and who purchases residential property in Canada with their spouse or common-law partner if the spouse or common law-partner is a Canadian citizen, person registered as an Indian under the Indian Act, permanent resident
Can a non-resident buy property in Canada?
A non-resident can still buy a home in Canada if they are the following persons:
- Temporary residents studying in Canada
- Temporary residents working in Canada
- Refugee claimants and individuals fleeing international crises
- Accredited members of foreign missions in Canada
- Non-Canadian spouses and common-law partners
How is a residential property defined in the foreign buyer ban act?
The foreign buyer ban defines residential property as buildings of up to 3 dwelling units and parts of buildings, like semi-detached houses or condominium units. The Act doesn’t prohibit the purchase of larger, multi-unit buildings.
What types of real estate properties are exempted from the ban?
Prohibition on the Purchase of Residential Property by Non-Canadians Act excludes residential property outside of a Census Metropolitan Area or Census Agglomeration as identified in Statistics Canada’s Standard Geographical Classification 2021.
Please visit the following links for more details on the Prohibition on the Purchase of Residential Property by Non-Canadians Act.
- Prohibition on the Purchase of Residential Property by Non-Canadians Act
- Prohibition on the Purchase of Residential Property by Non-Canadians Regulations: SOR/2022-250
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