Buying residential properties by foreign individuals has been banned by the Canadian government. Effective January 1, 2023, the ‘Prohibition on the Purchase of Residential Property by Non-Canadians Act’, prohibits a non-Canadian to purchase, directly or indirectly, any residential property in the country.
Purchasing residential property in Canada by foreign commercial enterprises and individuals will be prohibited beginning January 1, 2023. The ban was approved by Parliament last summer in an effort to address housing shortages and affordability issues. The law makes an exception for home purchases by non-citizen immigrants and permanent residents of Canada including those with temporary work permits, refugee claimants, and international students who meet certain criteria.
The new real estate law is seen as a response to a rise in Canadian home prices since the beginning of the pandemic. Foreign buyers bought in large numbers, limiting supply and driving up home prices.
Prime Minister Justin Trudeau’s party campaign website says – “Ban foreign money from purchasing a nonrecreational, residential property in Canada for the next two years unless this purchase is confirmed to be for future employment or immigration in the next two years.”
Also Read: Tips to make the most of global investment opportunities in real estate, stocks and gold assets
However, according to the Canadian Real Estate Association, home sales are already on a downward trend. The actual national average sale price posted a 12% year-over-year decline in November and the Home Price Index (HPI) declined by 1.4% month-over-month and was down 4.4% year-over-year. The Bank of Canada has been raising interest rates, which has resulted in higher mortgage rates in Canada, as it has in the United States and other countries that have raised rates.
The recent amendment to the Act prohibits the purchase of residential property by non-Canadians and has banned foreign buyers from buying residential properties as investments. A non-Canadian will mean an individual who is neither a Canadian citizen nor a person registered as an Indian under the Indian Act nor a permanent resident. Residential property means any real property or immovable, other than a prescribed real property or immovable in nature.
Also Read: Stocks or real estate? Find out which asset class is generating the maximum investor interest
Every non-Canadian that contravenes this law and every person or entity that counsels induces, aids or abets or attempts to counsel, induce, aid or abet a nonCanadian to purchase, directly or indirectly, any residential property knowing that the non-Canadian is prohibited under this Act from purchasing the residential property is guilty of an offense and liable on summary conviction to a fine of not more than $10,000.