Prohibition the Purchase of Residential Property by Non-Canandians Act
As of January 1, 2023 Canada is introducing legislation that will prohibit the purchase of residential property.
The Prohibition on the Purchase of Residential Property by Non-Canadians Act prevents non-Canadians and corporations controlled by non-Canadians from purchasing residential property in Canada for 2 years.
The definition of “Non-Canadian” is defined as individuals who are not
- Canadian citizens
- permanent residents of Canada
- persons registered under the Indian Act.
The Act also applies to corporations based in Canada that are:
- privately held
- not listed on a stock exchange in Canada
- controlled by someone who is a non-Canadian
The Prohibition on the Purchase of Residential Property by Non-Canadians Act defines residential property as buildings of up to 3 dwelling units and parts of buildings, like semi-detached houses or condominium units.
The Regulations clarify that the prohibition applies to:
- residential property located in a census metropolitan area or a census agglomeration as outlined in greater detail below.
- vacant land that does not contain any habitable dwelling, that is zoned for residential use or mixed-use and that is located within a census metropolitan area or a census agglomeration
The. Act. has a $10,000 fine for any non-Canadian or anyone who knowingly assists a non-Canadian and is convicted of violating the Act. If a court finds that a non-Canadian has done this, they may order the sale of the house.
Exemptions from the ban include:
- Canadian citizens and permanent residents.
- International students who meet certain requirements, including having spent the bulk of the previous five years in Canada. They would be able to purchase a property for no more than $500,000.
- Workers who have worked and filed tax returns in Canada for at least three out of the four years prior to purchasing a property.
- Diplomats, consular staff and members of international organizations living in Canada.
- Foreign nationals with temporary resident status, including people fleeing conflict, and refugees.
Buildings containing more than three dwelling units, and recreational property — such as cottages, cabins and other vacation homes — will also be exempt.
What does this mean for buyers?
This means some change for buyers as they start their home search in 2023. Buyers who have continued to look for properties will see an uptick in competition for those low price product. According to Statistics Canada foreign buyers make up only 4.9% of total residential sales from 2019-2020.
This is only one of the ways that the federal government in addition to the provincial government is trying to help with hosing affordability. While it can be debated whether or not this will change anything, it may do more harm long term to foreign buyers who would have bought as well as construction industry.
Other changes for 2023
In addition to the Home Buyers ban starting in January, the Home Buyers cooling off period starts January 3, 2023. This will be a larger challenge for those that have been searching for a home in 2022. Now there will be a mandatory 3 day period will require buyers to do due diligence. In case the buyers choose to back out there will now be a penalty for them to back out. Where the Home Buyer Rescission Period applies, the rescission amount is 0.25% of the purchase price for the residential real property that is set out in the contract.
For questions feel free to reach out to see how this will affect your real estate goals for 2023