A new piece of legislation for Canadian home buyers has reverberated through media outlets around the world. It is a ban that applies to “residential property”, says real estate litigation lawyer, Arsen Krekovic, with Hoogbruin & Company in Vancouver, BC. He adds that it is clearly defined in The Prohibition on the Purchase of Residential Property by Non-Canadians Act. It came into force on January 1, 2023.
The “Foreign Buyer Ban” as it is more commonly referred to, applies to any condominium units (and common areas) and buildings that contain three or less dwelling units; essentially single family homes, duplexes and triplexes.
Since the Act is in its early stages of adoption, its related regulations, and how it will be applied is still in the discovery period for real estate lawyers and potential clients with questions of the litigators and the real estate agents.
Foreigners now banned from buying homes in Canada
Buying a home is one of the biggest decisions in life. Having the availability of choice, location even before financing factors into a purchase is dependent on ‘stock.’ What is available to Canadians was limited even in the face of high average home prices. And so, a two-year ban on some foreigners buying homes in Canada has come into effect.
With the aim of helping to ease the unaffordability of housing in our market, the ban is now in place. In January people who are not Canadian citizens or permanent residents will not be able to buy residential properties. It is estimated that non-Canadian residents make up less than 6% of homeowners in Ontario and British Columbia, yet the availability of homes for rent or purchase is tight.
Exemptions to the regulations do exist and it includes according to an announcement from the Canadian government, international students who have been in the country for at least five years, refugee claimants and people with temporary work permits.
It was felt that the ban would discourage buyers from viewing homes strictly as commodities instead of a residential property being a place to live and grow a family. A fine of $10,000 Canadian will be levied against anyone who breaches the new regulations to assist with housing.
Will this legislation ensure that housing is owned by Canadians and will serve to benefit those who live in Canada?
Legislation has been introduced into parliament but is not yet law. This means that real estate litigation lawyers are looking at how it might impact some of their clients as the final details are not yet firm. Uncertainty is still present.
A real estate lawyer can advise whether the 2-year ban, seemingly specific to residential property may also impact commercial property. Restrictions may apply.
News of non-Canadians banned from home buying has reverberated around the world, with major news outlets carrying the story.
The definition of non-Canadian is currently a person who is not a Canadian citizen, who is not a permanent resident or not a person registered as an Indian under the Indian Act.
Changes may yet be made and the 2-year term may be reviewed.
What provisions that may impact foreign companies should be explored with an experienced real estate litigation lawyer. Exceptions, such as buying residential property with a Canadian partner will also require proper advice on how to proceed.
Various taxes have been put in place, to date, concerning non-resident purchases and use of property intended to be available for use as residents in our tight market.
So, it can be expected that a new tax is likely to come into effect. The Underused Housing Tax. As a non-resident who owns a property that remains vacant, the additional tax will apply.
Consult your real estate litigation expert at Hoogbruin & Company to get the answer you need to make the right choices and be secure in your purchase or sales of residential properties in light of the new regulations.
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