Oct 20, 2014
The start of the new year saw Canada’s new foreign buyer ban officially come into effect.
The two year-ban, originally passed by Parliament in June to help address housing affordability challenges, will apply to non-Canadian individuals and commercial enterprises.
However, the Prohibition on the Purchase of Residential Property by Non-Canadians Act includes a long list of exceptions.
Below, we’ve outlined some of the key details of the ban, including the pertinent exemptions.
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Who does the ban apply to?
The ban applies to individuals who are not Canadian citizens, not permanent residents, and not persons registered under the Indian Act.
It also applies to corporations based in Canada that are privately held, not listed on a stock exchange in Canada or are controlled (representing at least 3% equity share or voting rights) by someone who is non-Canadian.
When is the ban in effect?
The foreign buyer ban took effect on January 1, 2023, and will remain in place for a period of two years.
Why was the ban introduced?
The Prohibition on the Purchase of Residential Property by Non-Canadians Act was introduced by the federal government as part of a strategy to tackle the housing affordability struggles faced by many Canadians. The government said it is meant to ensure housing remains accessible to Canadians.
"Homes should not be commodities,” Housing Minister Ahmed Hussen said in a release. “Homes are meant to be lived in, a place where families can lay down roots, create memories and build a life together.”
What are the consequences for those found in violation of the ban?
Any non-Canadians found in breach of the prohibition—as well as those that knowingly assist with the breach—could face a fine of up to $10,000.
Additionally, their property can be sold by court order and could see the non-Canadian receive no more of the proceeds other than the price they originally paid for of the property, less associated costs.
What are some of the exemptions?
The new legislation includes a number of exceptions in which non-Canadians will be able to continue to purchase property in Canada.
For example, larger buildings with four or more units are exempt. Some of the many additional exemptions include:
More precise details of the exemptions included in the legislation can be found on the Canada Mortgage and Housing Corporation’s website.
For those who’d like to understand more on who this impacts or want to understand the full depths of the act, we recommend reaching out to a mortgage broker and reviewing the materials published on the Government of Canada’s website.
Oct 20, 2014