On January 1, 2023, the Prohibition on the Purchase of Residential Property by Non–Canadians Act went into effect in Canada, placing a two–year ban on foreign home ownership. The hope is that this will free–up housing for citizens and permanent residents, but the act‘s implications and effects are more complicated than one might expect.
The ban applies to non–Canadians, and corporations controlled by non–Canadians, who are not Canadian citizens, permanent residents, or persons registered under the Indian Act. It also applies to privately held corporations not listed on a stock exchange in Canada and foreign corporations where the non–Canadian participants are majority shareholders.
Exceptions to the regulations include those who acquire an interest in a residential property due to separation, death, or divorce, as well as those who are refugees, have temporary resident status, or have worked and filed tax returns in Canada for three out of the four years prior to buying a property.
When it comes to what types of properties are affected by the ban, the act applies to all residential properties with up to three dwelling units, as well as vacant land considered for residential or mixed use in metropolitan areas or agglomerations with a population of over 10,000.
Though the foreign home ownership ban is intended to address the current housing crisis, only 6% of homes are bought by foreign individuals and corporations. Furthermore, economists and real estate professionals question whether this act will have a significant effect, as other tactics such as increased construction or curbing house flippers may be more effective.