Amendments to Foreign Buyer Ban Introduced by Canadian Government
The Canadian Government Introduces Amendments to Foreign Buyer Ban
On March 27, 2023, the Government of Canada announced several amendments to the Prohibition on the Purchase of Residential Property by the Non-Canadians Act, commonly known as the foreign buyer ban. These changes aim to expand exceptions to the regulations, which had caused unintended difficulties for real estate developers across the country.
The four amendments are effective immediately, and they include increasing the Foreign Control Threshold to 10%, allowing non-Canadians to purchase residential property for development purposes, lifting the ban on purchasing vacant land, and permitting work permit holders to buy one residential property if they have at least 183 days of validity remaining on their permit.
The original ban created restrictions for individuals and the resale market and also deemed an entity foreign if non-Canadians owned 3% or more of it.
Developers found this provision overly restrictive, particularly for real estate investment trusts (REITs), and welcomed the new threshold.
The development exception, which was previously only applicable to publicly-traded corporations, now also applies to non-Canadians purchasing residential properties for development purposes.
The amendments to the foreign buyer ban aim to make housing more affordable for Canadians by targeting foreign money.
Still, many in the industry have come to the consensus that the ban will not address the nationwide issue of housing affordability.
Nonetheless, developers are likely to feel some relief from these new changes.
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