Foreign Home Buyer Ban, Bill C-19, Effective Jan.1st, 2023
Published December 22, 2022
Effective for all residential real estate purchase and sale agreements dated January 1, 2023 or later, the Federal government has introduced a temporary ban on foreign buyers: The Prohibition on the Purchase of Residential Property by Non-Canadians Act.
On June 23, 2022 Bill C-19 received Royal Assent in the House of Commons. Among its provisions, Part 5, Division 12 enacts the Prohibition on the Purchase of Residential Property by Non-Canadians Act (the “Act”). As the title suggests, the purpose of the Act is to prevent the purchase of residential real property by any persons who are not Canadian citizens, registered as an Indian under the Indian Act, or a permanent resident. The Act also prohibits purchase of residential property for corporations that are not incorporated in Canada or are not listed on a Canadian stock exchange. Exceptions are allowed for temporary residents and protected persons under the Immigration and Refugee Protection Act, and the spouse or common-law partner of any Canadian or exempted person.
Some residential properties located in low density, nonmetropolitan areas may not be subject to this ban, but details will be sorted in as of yet unreleased regulations to the Act. Regulations are expected in the Spring of 2023.
Why?
Parliament has enacted this legislation in an attempt to combat the housing crisis that has swept across the country. Housing prices have skyrocketed in recent years leading to a situation where many new families and other first-time homebuyers are unable to enter the housing market. To combat this, Parliament has enacted this foreign buyer ban to ensure that there are more houses available to Canadians.
So How Does it Work?
The Act comes into effect for all housing sales dated January 1, 2023 or later. The Act does not void the purchase of residential property by non-Canadians. Instead, if a non-Canadian is convicted of purchasing the property in question, they may be forced to sell it for not more than the amount they bought it for. The non-Canadian, and any person or entity who “[knowingly] counsels, induces, aides or abets or attempts to counsel, induce, aid or abet” the sale will be fined up to $10,000 CAD.
This legislation does not apply to vacant land purchases and as stated earlier, some properties in low density areas many not be subject to the ban. The Act applies to any real property or immovable, other than a prescribed real property or immovable, that is situated in Canada and that is…
(a) A detached house or similar building, containing not more than three dwelling units, together with that proportion of the appurtenances to the building and the land subjacent or immediately contiguous to the building that is reasonably necessary for its use and enjoyment as a place of residence for individuals.
(b) A part of a building that is a semi-detached house, rowhouse unit, residential condominium unit or other similar premises that is, or is intended to be, a separate parcel or other division of real property or immovable owned, or intended to be owned, apart from any other unit in the building, together with that proportion of any common areas and other appurtenances to the building and the land subjacent or immediately contiguous to the building that is attributable to the house, unit or premises and that is reasonably necessary for its use and enjoyment as a place of residence for individuals.
(c) Any prescribed real property or immovable.
Regulations issued pursuant to the Act may be found here: Canada Gazette, Part 2, Volume 156, Number 26: Prohibition on the Purchase of Residential Property by Non-Canadians Regulations
What Does it All Mean ?
In short, the Royal Assent of this Act means that the purchase of residential property by non-Canadians will be severely restricted, making it even more important to connect early and often with the lawyer handling your file. Patterson Law’s property group will continue to monitor changes in the law to ensure we keep clients, realtors and the public informed and we encourage you to visit our website for updates or reach out directly to one of our lawyers or staff.
