Canada's ban on foreign home buyers comes into force on January 1st.  What you should know - National |

Canada’s ban on foreign home buyers comes into force on January 1st. What you should know – National |

Also coming into the New Year will be the federal government’s promised ban on foreign home buyers amid a growing push to make housing more affordable for Canadians.

Starting Jan. 1, 2023, foreign commercial businesses and people will be banned from buying residential property in Canada for two years in an effort to cool the speculation that has helped propel the country’s housing market to unprecedented highs over the past three years.

Read more:

Trudeau eyes foreign buyers ban on non-recreational properties, no more blind offers

The ban, approved by parliament on June 23, is the cornerstone of Trudeau’s plan to address Canada’s frenetic housing market, which has struggled with tight supply, leading to bidding wars, extreme buyer anxiety and skyrocketing costs.

“Through this legislation, we are taking action to ensure that housing is owned by Canadians, for the benefit of everyone who lives in this country,” Housing Minister Ahmed Hussein said in a Dec. 21 news release.

The story continues below the ad

Here’s everything you need to know about the ban.

Under this new rule, anyone who is not a Canadian citizen or permanent resident will not be able to buy residential property in Canada for two years starting January 1.

The ban also applies to non-Canadian company owners, who are prevented by the regulations from evading the ban.

Non-Canadian citizens caught in violation of the ban will be fined up to $10,000 and may be ordered to sell the property, according to the legislation.

The impact of foreign ownership has been a hot topic in Canadian real estate for years, even as attention is growing on the influence of domestic investors, who account for about a fifth of purchases in recent years, according to the Bank of Canada.

The story continues below the ad

Click to play video:

How domestic investors are fueling Canada’s hot housing market

The Canada Mortgage and Housing Commission released its 2020 condominium survey results in May 2021, reporting that “the share of housing units owned by non-residents was in the low single digits in most of Canada’s largest centres”.

Cities such as Vancouver, Toronto, Montreal and Ottawa had shares above one per cent.

READ MORE: Ontario apartments 35% smaller on average than 25 years ago: MPAC

The CMHC said “related work from Statistics Canada also reports comparably low non-residential ownership shares for cities surveyed in 2019”.

In its 2019 data, Statistics Canada found that non-resident owners are mostly not owner-occupiers. Non-residents own 15 to 20 per cent of vacant units in Toronto and Vancouver.

The story continues below the ad

“This suggests that non-resident ownership is concentrated in the secondary rental market. Taken together, the CMHC and Statistics Canada results suggest that in the secondary rental housing market, non-resident ownership is likely to be concentrated in newer and larger rental buildings,” CMHC said.

Click to play video:

Critics say the Housing Supply Act won’t help BC’s affordability crisis

“These buildings generally command higher market rents,” he added.

Adil Dinani, a broker at Royal LePage West in BC, said Canadian Press in 2021 that he opposed the ban on foreign buyers because he says foreign buyers make up a small fraction of the country’s buyers.

“They’re not the ones pushing prices up, and they’re not the ones absorbing or buying all the inventory,” Dinani said.

He pointed out that BC already has a 20 per cent foreign buyer tax, which he said the federal government should consider.

The story continues below the ad

Ontario also raised the non-resident speculation tax on homes purchased by foreign nationals from 20 per cent to 25 per cent this October.

There are some exceptions, including those with temporary work permits, refugee claimants and international students who meet certain criteria.

According to law firm MLT Aikins, “refugees and non-Canadian individuals who purchase residential property with a spouse or partner – provided that their spouse or partner is a Canadian citizen with permanent residence in Canada, a person registered as an Indian under Indian law or a refugee” — may also be exempt from the ban.

Click to play video:

The federal budget includes a tax-free savings account for first-time home buyers

What type of properties are affected?

According to the CMHC website, the ban applies to “residential property that includes single-family homes or similar buildings with one to three residential units, as well as portions of buildings such as semi-detached houses, condominiums or other similar spaces.”

The story continues below the ad

However, recreational properties such as cottages or lake houses will be exempt from the ban, CMHC added.

The new law states that residential properties not located within a census agglomeration or census metropolitan area will not be subject to the ban.

READ MORE: Problems fueling Canada’s hot housing market will take ‘years’ to resolve: Freeland

“This generally means that municipalities with a core population of less than 10,000 people will not be subject to the ban, while municipalities with a core population of more than 10,000 people will be affected,” MLT Aikins explains on his blog.

“The above impact relates to the federal government’s desire to exempt certain recreational properties from the ban. However, it is noteworthy that some smaller municipalities where people own vacation property will be affected,” the law firm added.

The law also states that any lot that “does not contain any habitable dwelling that is zoned for residential or mixed use” is subject to the ban.

“This means that the ban will apply to certain properties that would not generally be considered residential at the time of purchase, but rather focuses on the potential of such land to be converted to residential at some point in the future. ” said MLT Aikins.

The story continues below the ad

Read more:

Are you hoping for a sharp drop in house prices next year? It’s unlikely, says Royal LePage

But the effects of the ban remain to be seen, especially as the effects of the Bank of Canada rate hike continue to ripple through the economy and inflation — including food prices.

About 41 percent of Canadians have put plans to buy or sell a home on hold this fall due to fears of a 2023 recession, according to a Re/Max survey.

The real estate firm predicted last month that Canada’s housing market is poised to return to “equilibrium” well into 2023, with most price increases outside the most expensive markets.

— With files from The Canadian Press and Global News.

#Canadas #ban #foreign #home #buyers #force #January #1st #National #Globalnewsca

Leave a Comment

Your email address will not be published.