What’s Happening with the Foreign Buyers Ban?
You might’ve heard in the news that as of January 1, 2023, new regulations came into effect for the Prohibition on the Purchase of Residential Property by Non-Canadians Act. Since real estate law can be confusing at the best of times and downright illegible at the worst, we thought we’d try to break it down for you.
Why the change in legislation? The Canadian Mortgage and Housing Corporation hopes that the updates will drive home prices down, specifically in cities like Toronto and Vancouver where prices are inaccessible to the majority population. According to an assessment by the Parliamentary Budget Office, the average house price in Canada is 67% higher than the average Canadian household can afford.
Basically, as a way of deterring foreign buyers from purchasing property and driving up prices, there is now a “ban” on foreign buyers in particular locations for particular properties. The Act states that foreign buyers may not purchase residential properties in two areas:
A census metropolitan area — total population of at least 100,000 people with a core population 50,000+
A census agglomeration — total population of at least 100,000 people with a core population of 10,000+
NOTE: In the Act, the term residential property describes “a detached house or similar buildings…a semi-detached house, rowhouse unit, residential condominium unit or other similar premise”.
Though the Act focuses on foreign buyers, there are exceptions. Anyone who holds permanent residency status, a temporary work visa, or is an international student is exempt from the changes.
Rule breakers will be faced with a fine of up to $10,000 and could have to sell the property they purchased.
We are always more than happy to discuss current market news and trends to help you better understand the climate you’re about to sell, buy, or rent in. Get in touch to learn more.
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