Federal Foreign Buyer’s Ban: What to Know

A Ban on Foreign Ownership of Residential Property Became Law on January 1, 2023, Prohibiting Anyone Who Is Not a Canadian Citizen or Permanent Resident from Purchasing Residential Property for a Period of Two Years

 

The Liberal Party announced the ownership ban in the 2021 election and rolled it out in the federal Budget 2022: a plan to grow our economy and make life more affordable. The government’s goals were clearly stated in the budget:

“We will do everything we can to make the market fairer for Canadians. We will prevent foreign buyers from parking their money in Canada by buying up homes. We will make sure that houses are being used as homes, rather than as commodities to be traded,” – Budget 2022.

To this end, the government tabled Bill C-19,  Budget Implementation Act, 2022, No. 1. It received Royal Assent on June 23, 2022. Section 235 of the bill is the Prohibition on the Purchase of Residential Property by Non-Canadians Act.

The act defines a non-Canadian as:

1. an individual who is neither a Canadian citizen nor a person registered as an Indian under the Indian Act nor a permanent resident;
2. a corporation that is incorporated otherwise than under the laws of Canada or a province;
3. a corporation incorporated under the laws of Canada or a province whose shares are not listed on a stock exchange in Canada for which a designation under section 262 of the Income Tax Act is in effect and that is controlled by a person referred to in paragraph (a) or (b); and
4. a prescribed person or entity.

Include:

• A temporary resident within the meaning of the Immigration and Refugee Protection Act; or
• A non-Canadian who buys residential property with a Canadian spouse or common-law partner if the spouse or common-law partner is a Canadian citizen or permanent resident, or person registered as an Indian under the Indian Act.

Includes any real property or immovable that is:

1. a detached house or similar building, containing not more than three dwelling units;
2. a semi-detached house, rowhouse unit, residential condominium unit or other similar premises, vacant land, where the land has been zoned for residential use or mixed use and is within a Census Metropolitan Area (having a population of at least 100,000) or Census Agglomeration (having a population of at least 10,000); or
3. any prescribed real property or immovable.

Non-Canadians found guilty of contravening the act are subject to a fine of not more than $10,000. If the federal government orders the sale of the property, the non-Canadian buyer won’t receive more than the amount paid for the property.

The ban doesn’t apply if the agreement of purchase and sale of the residential property involving a non-Canadian is dated before January 1, 2023.

Future regulations will provide details on transactions deemed prohibited purchases, including whether exceptions apply to conditional contracts entered into before January 1, 2023, that become unconditional on or after January 1, 2023.