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February 9, 2024

Canada extends foreign home buyer ban until 2027

The Canadian government has extended the Prohibition on the Purchase of Residential Property by Non-Canadians Act until January 1st, 2027.

The policy, which was initially instituted to increase the number of housing units available to Canadians for purchase, will now be in place for an additional two years. Initially, the home buyer ban was set to expire at the start of 2025.

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Under this extended policy, non-Canadians (those who are not Canadian citizens or permanent residents) are prohibited from buying residential property, which is defined as buildings with 3 dwelling units or less, and includes semi-detached houses, and condominium units. Non-Canadians can still purchase residential properties outside of Census Metropolitan Areas and Census Agglomerations.

Are there any situations where non-Canadians can buy or receive residential property?

According to the Act, there are some instances where non-Canadians would be allowed to purchase residential property in major population centers. These are:

When a non-Canadian acquires an interest in a residential property because of a divorce, separation, gift, or death;
When a non-Canadian rents a dwelling unit to occupy the dwelling unit—in other words, a non-Canadian who is renting and occupying the dwelling unit does not constitute a purchase;
When a creditor exercises a security interest or secured right, such as the seizure and foreclosure of a residential property; or
When a non-Canadian purchases residential property for development.

In April of 2023, the Canadian government amended the initial rules, allowing non-Canadians with a valid work permit to purchase mixed-use and commercial land, if they meet the following requirements:

They have at least 183 days left on their work permit, or have work authorisation at the time of purchase; and
They have not purchased more than one residential property in Canada.

In addition, the amendment repealed other conditions for non-Canadians (including previous work experience and tax requirements) and now allows non-Canadians to buy vacant land zoned for residential and mixed-use purposes, that can be used for any purposes by the purchaser, including residential development.

If non-Canadians want to prove that they are purchasing or renting property in accordance with the act, they may provide the following documentation:

Work or study permit issued by Immigration, Refugees and Citizenship Canada (IRCC);
Verification of status issued by IRCC; and/or
Other documents that show they reside in Canada and can establish the length of time they have resided in Canada to meet an exception to the prohibition (for example, rental agreements, utility bills, or records of travel in and out of the country).

What happens if non-Canadians are found improperly buying Canadian residential property?

Should non-Canadians be found in violation of this act, this will be treated as a criminal offence, and penalties may be imposed upon them. Non-Canadians found in violation of the Act (and any parties that have assisted them in doing so) may be fined up to $10,000 CAD.

In addition, if a non-Canadian is found violating the Act, a court can order the sale of the residential property, which will result in the non-Canadian receiving “no more than the price paid to purchase the residential property”. If a corporation or entity commits is found in violation, officers, directors, senior officials, and other representatives of the corporation or entity can be found liable for this offence.

The extension of the Prohibition on the Purchase of Residential Property by Non-Canadians Act is one of several measures that the Canadian government has instituted to help create more affordable housing for Canadians—including the Apartment Construction Loan Program, Housing Accelerator Fund, and more.

Home prices in Canada

Based on data from the Canadian Real Estate Agency (CREA), the average price of homes sold in Canada in December 2023 was $657,145 CAD, representing an increase of 5.1% from the price of homes sold in December 2022.

The agency also reports a 5.8% increase in the number of listings over the same period, yielding 25,671 new homes for sale at the end of last year.

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