On January 1, 2023, a new law to prohibit foreign investment in housing in Canada will come into effect temporarily prohibiting most foreigners and non-Canadian companies from purchasing residential property in Canada for a period of 2 years, i.e., until December 31, 2025.
This law has the interest of alleviating the inflation currently experienced by Canada.
There is a great deal of uncertainty since the exception is conditional on the December 9, 2022 regulation which itself lacks specifics .
Who is affected by this ban?
The law is primarily aimed at foreigners and non-Canadian companies. Canadian citizens, permanent residents or any person registered as an Indian under the Indian Act will not be affected by this ban.
However, exceptions for certain people are made for :
- Permanent residents.
- Non-Canadians who purchase residential property with their spouse or common-law partner, provided the spouse or common-law partner is eligible to purchase residential property in Canada.
- Refugees.
- Temporary residents who:
- Are enrolled in an authorized program of study at a designated educational institution and :
- The purchase price of the property does not exceed $500,000.
- They have filed tax returns in Canada for the five years preceding the year of purchase.
- Have been physically present in Canada for at least 244 days in each of the five calendar years preceding the purchase.
- Have not purchased more than one residential property.
- Hold a work permit or are authorized to work in Canada and :
- Worked full-time in Canada for at least three years in the four years preceding the year of purchase.
- Have filed all required tax returns for at least three of the four tax years prior to the year of purchase.
- Have not purchased more than one residential property.
- Foreigners who hold a passport containing a valid acceptance as a diplomat, consular officer, civil servant or special representative issued by the Chief of Protocol of the Ministry of Foreign Affairs, Trade and Development.
- Acquisition of an interest or right in rem as a result of death, divorce, separation or gift.
- A lease of a dwelling to a tenant for the purpose of occupancy by the tenant.
- Transfer under a trust that was created before the Act came into force.
- A transfer resulting from the exercise of a security interest or a right secured by a secured creditor.
With respect to purchase and sale agreements signed before January 1, 2023, these may be entered into after the implementation of the Prohibition Act.
What are the consequences of not complying with this ban?
The law states that in the event of non-compliance with this prohibition, the real estate transaction would not be invalidated, but the buyer or any person assisting or advising the buyer would be subject to a maximum fine of $10,000.
In addition, in the event of a conviction, the superior court of the place where the residential property is located would be entitled to issue an order forcing the sale of the residential property without allowing the non-Canadian to receive the proceeds of such sale in an amount greater than the price originally paid by the convicted purchaser.
What types of property are covered by this ban?
Any real property or building with more than three dwelling units is covered by this prohibition, including single family homes, semi-detached or row houses, residential condominiums, etc. However, vacant land is not included in this prohibition.
It is crucial for brokers to inform their clients of this major change that will take place early next year. Until then, they will have to be careful to get the details in the application regulations.
Our brokers believe that this legislation is not appropriate, especially for temporary residents who should have the opportunity to move to Canada with their families. We believe that skilled workers who move to Canada should have the right to own property to live in and not for speculative purposes.
We invite you to sign this petition to challenge the law to prohibit the purchase of real estate by non-Canadians .
