Before the Ford government introduced their More Homes Built Faster Act, Canadian Parliament introduced their own measure in June. Both measures aim to increase housing supply.
So as of January 1, 2023, anyone who is not Canadian or a permanent resident will be unable to purchase residential property anywhere in Canada.
This exclusion is contained in the Prohibition on the Purchase of Residential Property by Non-Canadians Act.
The details
What we’re not yet sure about is whether any vacant land and/or cottage outside of major metropolitan centres will be exempt from the new law. But if you’re a foreign buyer and have signed or will sign before the new year, you’ll be exempt.
Moreover, the law does not apply to temporary residents under the Immigration and Refugee Protection Act; or if you co-purchase a property with your spouse or common-law partner who are Canadian.
What’s interesting is that the law not only affects buyers, but developers, lawyers, and real estate agents who are involved in purchases by clients who are not Canadian.
Penalties
Should you be found in violation of this new law in 2023 or 2024, you will be fined up to $10K. The federal government may also apply for the provincial court to sell the property at no more than the original purchase price.
What will it do?
Much like the provincial government’s move, the intention of the new law is to make it easier for Canadians to buy real estate. It also aims to keep housing prices lower than if foreign buyers were also involved.
Additionally, the new law will contain a two-year limit.
While it will likely take until we’re a few months into the new year to notice a difference, the law makes sense. Competition will be reduced, and the deep pockets of some foreign buyers will not factor into the selling price. In theory, there should be more inventory and fewer price escalations.
It will be hard to measure effectiveness of the law though, given that we won’t know what properties foreign buyers are prevented from buying since they’ll be banned.
But it should definitely help. And that’s good news for you and me.
Potential Problems
There is a chance that the court rules this new law unconstitutional. Why? Under the Constitution of Canada, the provinces have jurisdiction over laws affecting property. But it’s the Federal Government that holds authorization for naturalization and immigration.
Now, is this move by the Feds about immigration and citizenship, or regulating property law? Since it regulates non-Canadians first, and property rights second, the law should be upheld.
But as we’ve seen from the provinces, they won’t shy away from asking the Supreme Court for a ruling that they might deem unconstitutional. We’ll just have to wait and see.
For full details on the new law, click here.
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Photo by Jason Leung on Unsplash
