Foreigners cannot buy homes in Canada for 2 years, unless...
25 Oct 2022
As of January 1, 2023, non-Canadians will no longer be able to buy residential properties in the country for a period of two years.
You may have heard about this new Canadian law, which will come into effect on January 1, 2023.
On June 23, 2022, Parliament passed the Prohibition on the Purchase of Residential Property by Non-Canadians Act. There has been a lot of information and discussions circulating on social networks and we believe that it is important to shed some light on the subject.
What is this Act?
The Act aims to temporarily prohibit a large number of foreigners and foreign companies from buying residential properties in Canada for a period of two years, starting January 1, 2023. It is a temporary law, a kind of moratorium, adopted by parliamentarians in order to temporarily limit or deter foreign buyers in order to prioritize Canadian buyers, and thereby slow down real estate speculation and curb inflation.
Who is affected by this ban?
Individuals who do not have Canadian citizenship or permanent resident status will be prohibited from directly or indirectly purchasing residential property in Canada for a period of two years. The Act also applies to purchases made through corporations, trusts or other legal entities. There are, however, a few exceptions.
Who is exempt?
Some non-Canadians will still be able to buy residential property on Canadian soil. They are:
- Temporary residents with a valid Canadian work permit;
- Refugees and those who have asylum in Canada;
- Foreigners buying with a spouse or common-law partner who is a Canadian citizen or a permanent resident (*your spouse must have lived with you for at least one year);
- Foreign students in the process of obtaining permanent residence;
- Foreign states buying for diplomatic or consular purposes.
What types of dwellings are affected by this ban?
The Act applies to the following types of residential properties:
- Detached houses (single-family, semi-detached, row);
- Condominiums;
- Buildings with three units or less;
- Vacant land for residential use located in a metropolitan area.
Certain types of properties will not be affected by the Act, such as multiple dwellings (more than 4 units), vacant land located outside a metropolitan area, commercial and industrial buildings and land, as well as certain recreational properties like those we see in regions like Mont-Tremblant and Whistler, but they will have to be the subject of an exception in a future regulation.
What are the sanctions or penalties for non-compliance with the Act?
If you deliberately decide to disregard this ban, you will face a maximum penalty of $10,000. As well, if someone assisted you in circumventing the Act, they are also subject to a fine. It should be noted that failure to comply with this ban does not invalidate the transaction. If you are found guilty, however, the jurisdiction of your province could force you to sell the building under a court order.
What is the real estate broker's role?
Tout comme les notaires et les avocats, les courtiers immobiliers sont dans l’obligation d’informer leurs clients étrangers qui planifient un achat en sol canadien. Bien entendu, nous n’avons pas pour rôle de faire appliquer la loi. Toutefois, nous ne pouvons conseiller sciemment un non-Canadien à enfreindre les mesures, auquel cas, nous nous exposerions, nous aussi, à des poursuites.
Like notaries and lawyers, real estate brokers are required to inform foreign clients who are planning a purchase on Canadian soil of the Act. Of course, our role is not to enforce the law. That said, however, we cannot knowingly advise a non-Canadian to violate the measures, in which case we, too, would expose ourselves to legal action.
If you are planning a purchase soon and believe you are affected by this law, we will be happy to discuss it with you or refer you to a lawyer who can advise you in greater detail.
We will keep you informed of developments regarding the Act and its regulations. To be continued…
To read the Act and what it contains: Prohibition on the Purchase of Residential Property by Non-Canadians Act (justice.gc.ca)
** Note to the reader: The regulations to the Act remain to be determined and these may modify the content of this article. This article does not offer a legal opinion and can in no way engage the responsibility of its author. **
By Celina Machado, Marketing Director and Residential Real Estate Broker, Martin Dumont Real Estate Team
