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As of January 1st, 2023 the Prohibition on the Purchase of Residential Property by Non-Canadians Act, S.C. 2022, c. 10, s. 235 (the “Act”) came into effect which prevents certain non-residents from purchasing residential property in Canada. This ban is meant to address the housing supply shortage and regulate the cost of properties and will remain in place for two years.

As the foreign homebuyers ban takes effect in Canada, here is what you need to know about the regulations:

Why is the Ban in Effect?

The ban aims to help ease one of the most unaffordable housing markets in the world. The intent of the law is to close the door on foreign investors who buy Canadian real estate, sometimes leaving homes vacant or underused, effectively driving prices up.

In a statement, federal housing minister Ahmed Hussen said the ban is meant to discourage buyers from looking at homes as commodities instead of a place to live and grow a family. The ban ensures that housing is owned by Canadians, for the benefit of everyone who lives in this country

Who is Prohibited Under the Act?

The prohibition under the Act applies to “non-Canadians,” which means:

  • An individual that does not fall within one of the categories below:
    • Canadian citizens;
    • Permanent residents; and
    • Persons registered as an ‎Indian under the Indian Act;
  • A corporation that is not incorporated under the laws of ‎Canada or a province; and
  • A private corporation incorporated under the laws of Canada or a province that is controlled by ‎a non-Canadian person referred to above.

The prohibition does not apply to a non-Canadian that entered into an agreement of purchase and sale or assumed the obligations under an agreement of purchase and sale for residential property prior to the day on which the Act came into force.

Which Properties are Affected?

The legislation applies to residential properties located in a census metropolitan area or a census agglomeration, says the Canada Mortgage and Housing Corporation (CMHC). A census metropolitan area has a total population of at least 100,000 people, with at least 50,000 living in its core, while a census agglomeration has a core population of at least 10,000 people.

The law also states that any land that “does not contain any habitable dwelling, that is zoned for residential use or mixed-use” is subject to the ban. This means that the ban will apply to certain properties that would not generally be considered to be residential at the time that a purchase occurs, but rather focuses on the potential of such land to be developed into a residential property at some point in the future.

However, the law does not explicitly ban the purchase of larger buildings with multiple units.

Who is Exempt from the Ban?

There are some exemptions to the ban, including foreign buyers purchasing recreational properties such as cottages and cabins, residential real estate outside of cities with a population of at least 100,000, international students on a path to permanent residency, refugee claimants, and the spouses and common-law partners of Canadian citizens.

The ban does not apply to those who are Canadian citizens or permanent residents, nor does it apply to non-Canadians who are looking to rent a residential property in Canada.

Among the exceptions are temporary residents studying in Canada if they:

  • Are enrolled in a program of authorized study at a designated learning institution as defined in the Immigration and Refugee Protection Regulations.
  • Have filed income tax returns for each of the five taxation years preceding the year in which the purchase was made.
  • Have been physically present in Canada for a minimum of 244 days in each of the five calendar years preceding the year in which the purchase was made.
  • Have not previously purchased a residential property in Canada while the prohibition is in effect.
  • Purchase a property for a price not exceeding $500,000.

There is also an exception for temporary residents working in Canada, if they:

  • Hold a valid work permit or are authorized to work in Canada.
  • Have worked full-time in Canada for at least three years within the four years preceding the year in which the purchase was made.
  • Have filed income tax returns for three of the four taxation years preceding the year in which the purchase was made.
  • Have not previously purchased a residential property in Canada while the prohibition is in effect.

Consequences for Breaking the Rules

Non-Canadians who violate the ban can be fined up to $10,000 and may be required to sell the property they purchased. Those who knowingly assist a non-Canadian with their purchase can also be fined. In the case of a corporation or other entity, anyone who directs, authorizes, or assents to, acquiesces in, or participates in the commission of the offence of counselling, inducing, aiding, or abetting is deemed to be a party to the offence. This includes any individual authorized to exercise managerial or supervisory functions on behalf of the corporation or entity. The rule ensures that persons acting on behalf of a corporation or other entity are not able to hide behind the corporate veil and can be personally penalized for transgressions that are undertaken in the name of the company.

The federal government can also apply to the superior court in the province where the home was purchased for an order to sell the property.

Although inflation is on the rise, the hope is that this federal prohibition results in a more affordable housing market for Canadians and establishes housing as an essential need and right for residents of this country.


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