Since the beginning of 2023, Canada has implemented a two-year ban on foreigners buying non-leisure residential properties, making it the most restrictive developed country for foreign buyers. The ban was implemented to address the housing shortage and high prices due to the influx of overseas buyers and immigrants into Canada.
The Prohibition of Non-Canadians from Purchasing Residential Property Act came into effect, but shortly after, Canada's Housing and Diversity and Inclusion Minister, Ahmed Hussen, announced amendments to its provisions. These amendments, which will take effect on March 27, 2023, aim to support individuals and families who want to own a home in Canada sooner while addressing housing supply issues.
The Canadian Government has announced several amendments to the Prohibition on the Purchase of Residential Property by the Non-Canadians Act's accompanying Regulations. The changes aim to increase the flexibility of newcomers and businesses looking to contribute to Canada's housing supply.
The amendments will enable those who hold a work permit or are authorized to work in Canada under the Immigration and Refugee Protection Regulations to purchase residential property. Work permit holders are eligible if they have 183 days or more of validity remaining on their work permit or work authorization at the time of purchase and have yet to purchase more than one residential property. The current provisions on tax filings and previous work experience in Canada are being repealed.
Section 3(2) of the regulations is being repealed, which previously applied the Prohibition on purchasing residential property to all lands zoned for residential and mixed-use. Now, vacant land zoned for residential and mixed-use can be bought by non-Canadians for any purpose, including residential development.
The exception allows non-Canadians to purchase residential property for development. The amendments also extend the exception currently applicable to publicly traded corporations under the Act to publicly traded entities formed under the laws of Canada or a province controlled by a non-Canadian.
The control threshold has increased from 3% to 10% for privately held corporations or privately held entities formed under the laws of Canada or a province and controlled by a non-Canadian. The change aligns with the definition of 'specified Canadian Corporation' in the Underused Housing Tax Act.
To improve the housing affordability of Canadians, Canadian Prime Minister Trudeau announced the two-year Prohibition on the Purchase of Residential Property by the Non-Canadians Act, hoping to release more multi-home supply to ease Canada's white-hot housing market. Beginning January 1, 2023, non-Canadians and overseas for-profit businesses will be unable to purchase non-leisure residential properties in Canada for two years. Illegal homebuyers will be fined up to 10,000 Canadian dollars (about 57,500 Hong Kong dollars), and any third party facilitating the illicit purchase home transaction will be punished.
The ban applies to non-Canadian citizens, except permanent residents or registered Canadian locals, companies not established under Canadian laws and not listed on Canadian stock exchanges and companies controlled by non-Canadians. However, there are exemptions for foreign workers, international students, diplomats, consular officers, members of international organizations, and foreign nationals with temporary resident status, including refugees.
"Residential" in the ban covers detached houses, semi-detached houses, townhouses, and apartment buildings with fewer than three households. However, foreign buyers can still purchase leisure and entertainment properties in Canada, which remain highly attractive.
While it may be more challenging for foreign buyers to purchase real estate in Canada, this presents an excellent opportunity for Canadian citizens and permanent residents to take advantage of a less competitive market. The new policy to make housing more affordable for Canadian citizens creates a promising opportunity to invest in the Canadian housing market.
Canada is known for being one of the most livable cities in the world, with policy advantages of unlimited purchases and loans that are attractive to foreign buyers. The two-year ban on foreigners buying non-leisure residential properties may make it more challenging for foreign buyers to purchase property in Canada. Still, it also presents an excellent opportunity for Canadian citizens and permanent residents to invest in the housing market. Meanwhile, leisure and entertainment properties in Canada remain highly attractive to foreign buyers.
Buying a home in Canada as a foreigner can be challenging. Are you feeling lost and uncertain about where to start? Let our team help you find your dream home in Canada! Contact us today to embark on your real estate journey now!
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