Here’s Why Foreigners Are Now Banned From Buying Homes in Canada

The rising housing affordability crisis in Canada is no news to anyone. Real estate experts have been predicting it for years while politicians have been redirecting the blame on foreigners. Even the government made the housing problem a campaign topic and committed to putting this situation under control. As it seems the solution at least according to the federal government is to say no to foreigners if they wish to own any land in Canada.

Although it has been a controversial decision, to say the least with opinions on it ranging from supportive to political it suffices to say that there is a lot more than meets the eye, and this article from The Canadian Home is all about that last bit.

What is the “ban?”

“Through this legislation, we’re taking action to ensure that housing is owned by Canadians, for the benefit of everyone who lives in this country,” Housing Minister Ahmed Hussein in a press release on Dec 21, 2022

Although the roots of this new law could be traced back to the election period of 2021 the actual law was passed by the parliament on June 23, 2022, and was put into effect on January 1, 2023.

The ban prohibits anyone (including foreign commercial enterprises) who is not a certified citizen of Canada or a permanent resident from purchasing any form of residential property in the country. Failing to abide by the ban or any attempt to breach it will be penalized with a fine of $10,000. The two-year moratorium is intended to deter international investors and homebuyers from treating residential real estate like a commodity rather than a place to raise a family.

Canada’s federal government hopes this will ease the country’s mounting housing affordability crisis and provide the middle class a fighting chance in a market that has seen record-high prices for the previous three years.

But wait there’s more

While as of January 1st, Non-Canadian residents are prohibited from purchasing any property in Canada for a period of two years; this rule is not uniform among all buyers, types of properties, or real estate markets.

Canadian officials approved waivers from the ban for some groups just 11 days before it was set to take effect on January 1st, including asylum claimants, temporary workers, and overseas students who had been living in the country for at least five years.

Here are all the cases in which the ban doesn’t apply

• Non-Canadian citizens who are immigrants, permanent residents, or have a work permit.
• Vacation homes in “recreational zones” are exempt from the rule, as are any cities outside of “census metropolitan areas” or “census agglomerations,” which are defined as those that meet certain population thresholds.
• Foreign nationals who purchase more than three units in a building or who have a spouse or partner who is a Canadian citizen are also exempt from the law.

Will it work?

“The prohibition on the purchase of residential property by non-Canadians can impact our reputation as a welcoming nation,” the Canadian Real Estate Association said in a statement.

Over the years, Canada’s housing market has become one of the costliest in the world because it has consistently been one of the most popular locations for millions of individuals wishing to relocate. Toronto and Vancouver, two of Canada’s largest cities, both have average property prices that have risen above C$1 million, placing them among the world’s most costly places to live.

So the question was never if there is a problem because yes there is. The question was and still is for many out there “is this the best we could do?”

Let’s look at some stats!

Government statistics show that non-Canadians make up only 6% of homeowners in British Columbia (which includes Vancouver) and Ontario (which includes Toronto) and that they make up less than 5% of all homeowners in Canada. In light of these numbers, real estate experts believe that the Canadian government should consider building more homes to accommodate demand instead of enacting a ban on foreign purchasers.

As the effects of the Bank of Canada’s interest rate hikes on the economy and inflation continue to ripple outward, the ban’s ramifications and advantages are still in the distant future.

P.S. We are here!

No matter where the ban leads the Canadian housing market in the near future you can be rest assured that The Canadian Home will always be here with the latest market and property updates for you to utilize. So, Download The App now and chalk off all your real estate needs.