Canada’s Foreign Buyer Ban: What You Need to Know

Understanding the Foreign Buyer Ban

Canada's federal government has extended the Prohibition on the Purchase of Residential Property by Non-Canadians Act to address housing affordability. This ban, in effect until January 1, 2027, aims to curb speculative investments by foreign buyers and prioritize access to housing for Canadian residents.

Below, we break down the key aspects of the legislation, its scope, and what it means for you.

What is the Foreign Buyer Ban?

The Act restricts non-Canadians from purchasing residential properties in Census Metropolitan Areas (CMAs) and Census Agglomerations (CAs). These are regions defined by Statistics Canada, often with high population densities and economic activity.

Census Metropolitan Areas (CMAs)

• Definition: Large urban regions with populations of 100,000+ (e.g., Toronto, Vancouver).
• Impact: Foreign purchases are heavily restricted in these areas to reduce housing demand and price inflation.

Census Agglomerations (CAs)

• Definition: Smaller urban regions with populations of 10,000+ (e.g., Orillia, Collingwood).
• Impact: Restrictions here prevent spillover effects as investors seek alternatives to CMAs.

Who Is Considered a "Non-Canadian"?

The Act defines non-Canadians as:

1. Individuals who are not citizens, permanent residents, or Indigenous persons registered under the Indian Act.
2. Corporations not incorporated in Canada or controlled by non-Canadians.

Properties and Duration Covered

• Applies to: Detached/semi-detached houses, townhomes, and condos in CMAs and CAs.
• Excludes: Recreational properties like cottages and homes in remote areas.
• Duration: Effective until January 1, 2027.

Exemptions to the Ban

The Act allows for specific exceptions:

1. Canadian Citizens and Permanent Residents: Fully exempt.
2. Protected Persons: Refugees or those under Immigration and Refugee Protection Act rules.
3. International Students: Eligible under certain conditions, including residency and tax filing.
4. Work Permit Holders: May purchase primary residences if they meet residency criteria.
5. Spouses of Canadians: Exempt if jointly purchasing with a Canadian citizen or permanent resident.

Certain acquisitions also don’t count as purchases, such as:

• Gifts, inheritance, or transfers under divorce/separation settlements.
• Renting for tenant occupation.
• Secured creditors exercising their rights.

Penalties for Violations

Violating the Act can result in:

1. Fines: Up to $10,000 for individuals and entities.
2. Forced Sale: Courts may order properties sold, with proceeds above the purchase price reverting to the government.

Why This Matters

For Foreign Investors

The ban significantly limits direct property ownership options. Legal advice is critical to navigate potential loopholes or exemptions.

For Domestic Buyers

By reducing foreign demand, the legislation aims to improve housing affordability for Canadians.

How Can a Real Estate Lawyer Help?

Navigating the Foreign Buyer Ban can be complex. A real estate lawyer can:

• Confirm if you qualify as a “non-Canadian.”
• Identify potential exemptions.
• Ensure property transactions comply with the law to avoid penalties.

Learn More

If you have questions about the Foreign Buyer Ban or want guidance tailored to your situation, contact us today. Let’s help you make informed, compliant real estate decisions.