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Changes will allow non-Canadians to purchase residential property in certain circumstances
Published on March 29, 2023 • Last updated 12 hours ago • 3 minutes read
The ban on overseas homebuyers has been amended to ease some restrictions on purchases. Photo by Getty Images/iStockphoto
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The federal housing minister has made changes to the rules on home ownership by foreigners, saying the move will bring more Flexibility for newcomers and companies looking to expand Canada’s housing supply.
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Canada Mortgage and Housing Corporation announced the changes on March 27, including raising the company’s foreign control threshold and allowing those with work permits to buy a home.
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“These changes will further support individuals and families looking to build a life in Canada by pursuing homeownership in their communities earlier and addressing housing supply issues,” the CMHC said in a press release.
The Ban on foreign homebuyers, which went into effect on January 1, barred non-Canadians from buying a home, either directly or indirectly, for two years. The ban carries the potential for $10,000 in fines for violators.
Officially known as the Prohibition on the Purchase of Residential Property by Non-Canadians Act, the ban was intended to take some pressure off house prices amid an affordability crisis fueled by the rising cost of living caused by inflation and higher interest rates was exacerbated.
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The rule changes, which went into effect on March 27, will expand the exemptions to allow non-Canadians to purchase a residential property in certain circumstances, the government said.
“These changes strike the right balance to ensure housing is used for the people living in Canada and not as a speculative investment by foreign investors,” said Ahmed Hussen, Minister for Housing and Diversity and Inclusion.
One of the changes introduced will allow people who have a work permit or who are permitted to work in Canada to purchase homes while working here.
Work permit holders who have not acquired more than one residential property are now eligible if they have 183 days or more of validity left on their work permits or work permits at the time of purchase, it said. This will repeal the current regulations on tax returns and prior work experience in Canada.
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The previous regulation on brownfield sites will also be lifted and the ban no longer applies to all areas with residential and mixed use. This means non-Canadians can now purchase vacant land designated for residential and mixed-use use for any purpose, including residential development.
There will also be an exception allowing non-Canadians to purchase homes for development purposes. This also extends the exception that currently applies to publicly traded companies to publicly traded companies incorporated under the laws of Canada or a province that are controlled by a non-Canadian, the CMHC said.
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Finally, the threshold for foreign control of companies was raised from 3% to 10%. This applies to private companies or individuals incorporated under the laws of Canada or a province controlled by a non-Canadian. The government said this aligns with the definition of a “specified Canadian company” in the Underused Housing Tax Act.
Mortgage expert Rob McLister said the ban on foreign buyers came into effect impulsively and without due consideration and is unlikely to affect housing affordability, given the long list of exceptions and low foreign ownership.
“This whole ban is so patchy and illogical that its political impetus couldn’t be more transparent,” McLister said, adding that policymakers should incentivize construction enough to “accommodate the hundreds of thousands of immigrants they keep coming back to.” introduce”.
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