Canada’s Prohibition on the Purchase of Residential Property by Non-Canadians Act, AKA the Foreign Buyer’s Ban, was passed in June 2022 to align Real Estate Canada with domestic buyers’ budgets and needs. Coming into effect on January 1, 2023, the Act aims to make housing more affordable for Canadians by prohibiting non-Canadians from purchasing residential property in Canada for two years, with some exceptions.
Amendments to the regulations have been announced recently to promote more flexibility for newcomers and businesses. These changes, which took effect on March 27, 2023, will help support individuals and families seeking to buy homes. Residential property includes detached homes or similar buildings, semi-detached houses, rowhouse units, residential condominium units and other similar premises.
So, what do these amendments mean for you? Is it the right time to look at Milton homes for sale? Let us explain the latest changes and how they may affect your decisions.
A Look at the Act
The Act restricts the purchase of residential property by any foreign investor who is not a Canadian citizen or permanent resident. The law only applies to non-Canadian individuals or entities who wish to purchase residential property in Canada, either directly or indirectly, for two years.
However, foreign investors were permitted to purchase recreational properties and properties with more than three separate units and homes outside census metropolitan areas (cities with more than 100,000 residents).
To purchase a home, temporary residents (such as those on study or work permits) must have been in the country for 244 days each year for the past five years and provide proof of filing tax returns in Canada during that period. Additionally, the purchase price of the residential property must be at most $500,000.
Those who violate the prohibition or knowingly assist non-Canadians in doing so, face penalties that include a $10,000 fine and potentially having to sell the offending property.
Effective immediately, individuals with a valid work permit can purchase their first primary property without providing a history of tax filings or work experience. To qualify, the work permit must have at least 183 days left, and the individual cannot own any other properties in Canada.
Section 3(2) of the regulations has been repealed to ensure that the prohibition no longer applies to lands zoned for residential and mixed use. The amendment means that non-Canadians can now purchase empty land zoned for residential or mixed-use and use it for anything they choose, including building a house.
Non-Canadians can now purchase residential properties for development purposes, allowing for the building of more housing units.
Initially, companies with more than 3% non-Canadian owners were restricted from residential development or investment. The limit has now been raised to 10%, which means that, for privately held corporations or entities controlled by non-Canadians, the new control threshold is 10%, as per the revised legislation.
In summary, the Canadian government has lifted some restrictions on foreign homebuyers to allow newcomers to own homes and increase the housing supply.
The amendments to the foreign homebuyers ban will allow newcomers to buy a home, and local businesses to create jobs and build homes – adding to the housing supply in Canadian cities, according to Canada’s Housing Minister Ahmed Hussen.
With these amendments and the rising rental prices in Canada, buying a house now may make sense rather than waiting. However, before you start browsing condos for sale in Barrie listings, consult an experienced real estate brokerage to help zero down on your new home!