As a part of the Trudeau government’s 2022 Budget, Parliament passed new legislation prohibiting non-Canadians from purchasing residential property in Canada. The Prohibition on the Purchase of Residential Property by Non-Canadians Act received royal assent on June 23, 2022 and will come into effect on January 1, 2023, lasting for a period of two years. The introduction of the bill is in keeping with one of the Federal Government’s primary goals for this year’s budget which was to stabilize the housing market and provide more affordable housing to Canadians amidst record-high inflation rates and sky-rocketing housing prices. In addition to the ban, the Trudeau government has set aside billions of dollars of additional funding towards building new housing and supporting new programs. Finance minister Chrystia Freeland says the ban is necessary in order to ensure that young Canadians are not being shut out of the housing market in major cities and towns across the country. For British Columbia, this can be seen as a further development of the 20 per-cent Foreign Buyers Tax which was implemented by the provincial NPD government back in 2018. This new federal ban will have even more significant implications for prospective immigrants who are not yet permanent residents or citizens of Canada.
The ban effectively prevents any non-Canadian individual or entity, including commercial enterprises, from purchasing residential property in Canada for two years. This prohibition however, does not include those working in Canada with valid work permits, international students studying at Canadian universities and institutions, nor refugee claimants.
The penalties for non-compliance with the new bill amount to fines of up to $10,000 as well as court orders for the property to be sold, for which the sale price of the property must not exceed the original price of purchase. These penalties also apply to any third party who knowingly assists a non-Canadian in the purchase of residential property. As immigration lawyers, we are frequently asked questions by our clients about any restrictions or tax consequences on purchasing properties in Canada prior to obtaining residence status. At present, the bill still leaves much to be determined on a case-by-case basis, as key terms such as “purchase”, “control” and what classes of persons may be exempt from its provisions are left entirely up to Ministerial discretion. Furthermore, it should be noted that the Government is still finalizing the details of this legislation and further regulations are expected to be put in place before it becomes an official Act of Parliament in the new year.
Opponents of the new bill question the Liberal government’s approach of blaming foreigners for the country’s current housing market. In a 2019 survey from the Canadian Housing and Statistics Program (CHSP), it was reported that just 6.2% of homes in BC and 3.3% of homes in Ontario were owned by non-residents. This relatively slim proportion of home ownership in Canada leads experts in the field to doubt that such a ban will have a positive impact on the crisis, if any at all. For the time being, non-Canadians should avoid purchasing residential properties in Canada; only time will tell whether these measures will prove to have any tangible effect on the current housing crisis.
The new bill entitled, the Prohibition on the Purchase of Residential Property by Non-Canadians Act, received royal assent on June 23, 2022 and will come into effect on January 1, 2023, lasting for a period of two years. Short of obtaining permanent residence status, prospective immigrants should consider obtaining temporary status as a worker or student if residential property ownership in Canada is your goal.