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February 16, 2023
New Law Restricts Non-Canadians from Buying Canadian Homes
The recent Prohibition on the Purchase of Residential Property by Non-Canadians Act has sparked both praise and criticism. This law bans non-Canadians from buying residential property in Canada, with some exceptions.
Goals of the Act
The main goal is to protect the Canadian housing market from foreign speculation, blamed for rising home prices. The act also aims to ensure Canadians can access affordable housing and prevent foreign investors from exploiting the market.
Arguments For the Act
Proponents believe the act will stabilize the housing market and prevent price hikes from foreign investors. They also argue it will protect Canadian citizens’ rights and ensure they are not priced out of the market.
Arguments Against the Act
Opponents argue the act could negatively impact the economy by discouraging foreign investment. They also fear it could reduce the number of available properties as investors might turn to other countries.
Key Takeaways
Non-Canadians are now prohibited from purchasing residential property in Canada. This ban includes condominiums, single-family homes, and other types of residential dwellings. The law applies to all non-Canadians, including permanent residents, foreign nationals, and those with temporary status.
Impact on Rentals and Investments
The law also bans non-Canadians from entering into lease or rental agreements for residential property in Canada. This could significantly impact the rental market. Additionally, non-Canadians cannot acquire interests in residential property, directly or indirectly. This means they cannot buy shares or interests in companies that own residential property in Canada.
Conclusion
The Prohibition on the Purchase of Residential Property by Non-Canadians Act is a significant piece of legislation. It aims to protect the Canadian housing market and ensure Canadians can buy homes without foreign competition. Foreign investors should take this law seriously if they plan to invest in Canadian residential property.
Defining the Parameters of the Act
The Act and Regulations define a “non-Canadian” as:
- An individual who is not a Canadian citizen, not a person registered as an Indian under the Indian Act, and not a permanent resident.
- A corporation incorporated under laws other than those of Canada or a province.
- A corporation incorporated under Canadian laws but controlled by non-Canadians and not listed on a Canadian stock exchange.
- An entity formed under non-Canadian laws.
- An entity formed under Canadian laws but controlled by non-Canadians or foreign entities.
The Act and Regulations define “residential property” as any real property or immovable located within a census agglomeration or census metropolitan area, including:
- Detached houses or similar buildings with up to three dwelling units.
- Semi-detached houses, rowhouse units, residential condominiums, or similar premises intended to be separate parcels of real property.
- Land without habitable dwellings zoned for residential or mixed use.
The Act defines “purchase” as acquiring a legal or equitable interest in a residential property, with exceptions for:
- Acquisitions by individuals due to death, divorce, separation, or gifts.
- Rental of a dwelling unit to a tenant for occupation.
- Transfers under pre-existing trusts.
- Transfers resulting from a secured creditor exercising their rights.
Sources: Cassels, Goverment of Canada
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