Update : The Honourable Chrystia Freeland, Canada’s Deputy Prime Minister and Minister of Finance, announced on February 4, 2024 that the current ban on foreigners buying Canadian homes would be extended by two years. This means that the current expiry date of 1 er January 2025 will be extended until 1er 2027 by the Government of Canada.
On March 27, amendments to the Regulation respecting the prohibition of purchase of residential immovables by non-Canadians came into force[1]. (the “Regulation“), being the regulations implementing the Act Respecting the Prohibition of Purchase of Residential Real Property by Non-Canadians [2] (the “Act“). This Act, in force since January1, 2023, aims to increase the affordability and availability of housing from coast to coast, by preventing non-Canadians from acquiring, directly or indirectly, for a period of 2 years, any residential immovable [3]. Admittedly, the Government of Canada had underestimated the impact of the Immigration and Foreign Workers Act. In order to correct the situation, the federal government has decided to make the amendments described below to the Regulations, in order to broaden the exceptions allowing non-Canadians to purchase residential real estate, with the aim of supporting individuals and families seeking to build a life in Canada through rapid access to home ownership [4]. The Honourable Ahmed Hussen, Minister of Housing, Diversity and Inclusion, announced the following changes:
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Work permit or authorization holder
Persons holding a work permit issued by the Government of Canada, or who are authorized to work in Canada under current legislation, may purchase residential real estate if (i) the permit or authorization is valid for 183 days or more from the date of purchase, and (ii) at the end of the purchase, the non-Canadian owns a single residential property.
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Vacant land
The Government of Canada has decided to repeal the section of the By-law prohibiting the purchase of land zoned for residential or mixed use. This amendment allows non-Canadians to purchase vacant land for any permitted use, including development.
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Completion of development or redevelopment
The Regulations now provide an exception for the purchase of residential real estate by non-Canadians for development purposes. The federal government defines development as “the process of evaluating, planning, modifying or improving (with or without a change in use) a residential property or the land on which it is situated” [5]. In short, simple repairs, renovations and similar changes do not qualify as development or redevelopment. The work must be of such magnitude that it is equivalent to the construction of a residential building or a major change in the use of the building.
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Threshold for foreign control of companies
The first version of the Regulations prohibited any company or private entity incorporated under federal or provincial law and controlled by a non-Canadian from acquiring residential property. Such a company was considered to be controlled by a non-Canadian when 3% of the company’s shares, equity or voting rights were held by a non-Canadian [6]. The threshold has now been raised to 10%, in line with the Act respecting the tax on underutilized dwellings [7]. In short, the changes introduced by the Government of Canada have the following objectives: (i) to enable non-Canadians to build or create residential properties, in particular by allowing the purchase of vacant land and development and redevelopment, and (ii) not to penalize foreign workers and other people wishing to settle in Canada, by enabling them to access home ownership quickly.
[1] SOR/2022-250, which was not up to date at the time of writing. [ 2] S.C. 2022, c.10. [3] Canada Mortgage and Housing Corporation, “Non-Canadian Residential Real Estate Prohibition Act – Frequently Asked Questions“, accessed April 1, 2023. [ 4] Government of Canada, “Amendments to the Regulation Prohibiting the Purchase of Residential Real Property by Non-Canadians“, consulted April 1, 2023. [ 5] Supra note 3 [6] Supra note 1, s. 1, definition of control. [ 7] S.C. 2022, c. 5.