Starting in January 2023, there will be a federal ban on non-Canadians buying homes across Canada. The Prohibition on the Purchase of Residential Property by Non-Canadians Act prohibits non-citizens and non-permanent residents from purchasing residential property in Canada for two years.
“Residential property” includes detached houses or similar buildings of one to three dwelling units, as well as parts of buildings such as semi-detached houses, strata units or other similar premises.
Even though this ban is less than 3 weeks away from being implemented, details have still not been announced and there is still a lot that we do not know about the Act. There may be exemptions for certain groups of people, types of residential property and special circumstances, but these have not yet been established.
There may be exemptions for the following:
– recreational properties, residential property located outside of a large urban centre, vacant land, indigenous peoples, international students on the path to permanent residency, individuals with work permits residing in Canada, individuals fleeing international crises, accredited members of foreign missions in Canada.
The BC Real Estate Association is concerned that this policy will create obstacles for homeownership for newcomers and can interfere with Canada’s ability to attract immigrants. The policy is at odds with the federal government’s own immigration targets, as they aim to welcome 465,000 people to Canada next year.
Will it work though?!
The answer is yes and no… are foreign buyers the problem?
In 2016 BC introduced a 15% foreign buyers tax (later raised to 20%), after which foreign buyer transactions fell to just 1.4% of all B.C. sales. That number went up in 2017 to 3-4%, but since 2020 it has remained at just 1-2%. There is no doubt there is a lot of foreign money in Vancouver- money being made elsewhere and spent here- but it’s not necessarily brought in by non-citizens and non-residents.
However, IF the public thinks this Act will have an effect, then it will have an effect (aka ‘The Media Effect’). If buyers and sellers believe that this ban will be responsible for a cooled market, that may in turn cause increased activity in the local market- crazy, right?! It’s the same when the news is reporting that the market is softening, and the public starts to believe the market is softening, so buyers back-off, and then behold- a soft market.
I’ll be updating my clients on this Act next month, when we hopefully know much more about it. In the meantime please reach out if you have any questions!