Certain limitations on foreigners buying residential property were loosened by the government mere months after the new laws went into effect. Residential property can now be purchased by non-Canadians with a work permit or legal authorization to work in Canada. To qualify, they must have at least 183 days remaining on their work permit or work authorisation and only buy one home.
In June of 2022, Parliament approved the Ban on the Acquisition of Residential Property by Non-Canadians Act, which made it illegal for foreign nationals to buy homes in Canada. Starting at the beginning of this year, foreign nationals will be unable to purchase a primary residence in Canada due to a new rule. In response to soaring property prices, the Liberals promised these restraints during the 2021 federal election campaign.
Any foreign worker legally authorised to work in Canada may now also buy a home in the country. Work permit holders must not already be homeowners and must have at least 183 days remaining on their permit at the time of purchase. For development purposes, non-Canadians and foreign enterprises can now buy residential property and unoccupied land zoned for residential or mixed-use.
In its original form, the law exempted people with temporary work permits from having to work full-time or file tax returns for at least three of the prior four years. Some people at the time worried that the policy would “create hurdles” for immigrants to Canada because the exemptions were so narrow.
But, with these revisions in place, requirements like tax returns and prior employment histories no longer apply.
Minister of Diversity and Inclusion Ahmed Hussen made the announcement on Monday. The Canadian Mortgage and Housing Corporation (CMHC) issued a press release saying the new policies would be implemented immediately.
With these changes, “newcomers will be able to put down roots in Canada through home ownership, and businesses will be able to generate jobs and build homes by increasing the housing supply in Canadian communities,” Hussen stated in a press statement. To prevent homes from being utilised as speculative investment by foreign investors, these changes “find the correct balance.”
Modifications to the foreign control, threshold and purchase of vacant land
Vacant land in residential and mixed-use zones will no longer be subject to the prohibition under the new regulations. This opens up the possibility of residential development on the land to non-Canadian buyers.
Another exception is being established to enable overseas investors to purchase residential land for the construction of new homes. The changes make this exemption valid for Canadian publicly traded corporations created by foreigners who do not have majority voting rights.
The federal government has proposed four adjustments, the last of which concerns raising the threshold for foreign control of a corporation. If a non-Canadian owns at least 10% of a corporation, the law currently considers it foreign-controlled. In the past, 3% was considered sufficient.
The original three per cent criterion impeded home developers that foreigners partially owned, the Canadian Home Builders’ Association (CHBA) said in a press release issued in February. The new changes were called “extremely needed” by the CHBA in a separate press release released on March 28.
Many Canadians still worry about whether or not they will be able to purchase a home, despite the fact that the national average price has declined since its peak nearly a year ago. According to a new survey by Mortgage Professionals Canada, an all-time high proportion of renters in the country are pessimistic about ever becoming homeowners.
Some market analysts believe that the prohibition will increase Canadians’ access to housing by making the market less competitive for foreign buyers of residential homes.
Yet, CMHC data collected in 2017 shows that foreign buyers only bought a small number of homes in different Canadian cities. In addition, the impact of the laws on Canada’s housing market has been met with conflicting opinions from real estate specialists.