Canada has made a major move to try to protect Canadian home buyers from foreign speculation in the housing market. As of January 1st 2023 the Government has imposed a ban on foreign buyers from purchasing residential real estate in Canada over the next two years.
The foreign buyer ban is part of a larger effort by the government to reduce the influence of foreign investors in the housing market and make it easier for Canadians to buy their own homes. The ban will limit the amount of foreign capital coming into the housing market, which should reduce competition and make it easier for Canadians to compete in the housing market. It may also reduce the amount of speculative investment in the housing market, which can be a major factor in driving up house prices.
A study by the Canada Mortgage and Housing Corporation found that 68% of Vancouver respondents, 48% of Toronto respondents, and 42% of Montreal respondents believe foreign buyers have “a lot of influence” on driving home prices up. In reality, low mortgage rates, lack of supply and record household savings following the pandemic all played a more significant roll in rising prices.
According to the Prohibition on the Purchase of Residential Property by Non-Canadians Act, a residential property includes detached homes or similar buildings, as well as semi-detached houses, rowhouse units, residential condominium units and other similar premises.
Homes in municipalities with a core population of less than 10,000 are not subject to the ban, nor are recreational properties such as cottages and lake houses. Additionally, the law does not explicitly ban the purchase of larger buildings with multiple units.
Non-Canadians who violate the ban can be fined up to $10,000 and may be required to sell the property they purchased. Those who knowingly assist a non-Canadian with their purchase can also be fined.