Can a Non-Resident Purchase Property in Canada?
Understanding Canada's Ban on Non-Canadian Residential Property
In January 2023, the Federal Government of Canada enacted The Prohibition on the Purchase of Residential Property by Non-Canadians Act [1] (often called the Non-Canadian Housing Ban) (the “Act”). The Act was designed to cool the housing market by restricting non-Canadians from purchasing residential property in Canada. The ban, originally set to expire on January 1, 2025, has now been extended until January 1, 2027 (“the Ban”).
The Act generally restricts non-Canadians from purchasing certain types of residential property in urban centres and some surrounding areas.
Key Aspects of the Prohibition on the Purchase of Residential Property by Non-Canadians Act
Who is Considered a “Non-Canadian” Under the Act?
The Act defines “non-Canadians” to include:
- Individuals who are not Canadian citizens or permanent residents.
- Corporations that are either not incorporated in Canada or are controlled by foreign persons or entities.
What types of “Residential Property” are impacted?
The Act applies to specific types of residential properties, including:
- Detached houses or similar buildings with up to three dwelling units.
- Parts of buildings, such as semi-detached houses, rowhouses, or condominium units, that are intended for individual ownership.
- vacant land zoned for residential or mixed use within Census Metropolitan Areas or Census Agglomerations. A map showing the affected areas is found here: Census Metropolitan Areas and Agglomerations[1]
Recreational and other homes located in rural areas that fall outside Census Metropolitan Areas or Census Agglomerations are not considered residential properties under the Act.
Exemptions to the Ban
Certain people and groups are exempt from the Ban, including:
- Refugees.
- Individuals purchasing residential property with a spouse or common-law partner who is eligible to buy property in Canada.
- Temporary residents, such as students and foreign workers, who meet specific criteria set out in the regulations.
- Individuals who have indigenous rights under Section 35 of the Constitution Act, 1982.
Impacts of the Extention for Non-Residents
The extended Ban means that non-residents will face continued restrictions if they wish to enter the Canadian real estate market. Foreign investors looking to purchase property will need to explore other types of properties, such as commercial or multi-family buildings with than 3 units, or look outside urban areas.
What if I Violiate the Ban?
Persons who violate the Act, or aid someone in violating the Act, may face fines up to $10,000. Additionally, the government could order the sale of unlawfully purchased property, with the proceeds of sale being used to pay the costs of sale and fines, with the offender being limited to recovering no more than the purchase price of the property.
Final Thoughts
The extension of the Prohibition on the Purchase of Residential Property by Non-Canadians Act is a sign of the governments show of commitment to addressing housing shortages and supporting domestic buyers. However, the question remains whether limiting foreign ownership will bring about long-term affordability, or if further measures or additional extensions will be necessary to meet the housing needs of Canadians.
[1] S.C. 2022, c. 10, s. 235
If you require assistance purchasing residential real estate as a foreign buyer, contact us online or by phone at 587.800.5895 and we would be happy to help.
At Clear Title Law, we help clients with a wide range of legal matters including real estate law, business and corporate law, estate planning law and estate administration law. If you require assistance with a real estate matter in Alberta, contact us online or by phone at 587.800.5895.
The material provided through the Clear Title Law website is for general information purposes only. It is not intended to provide legal advice or opinions of any kind.
