Canada Implements Foreign Buyer Ban on Real Estate Purchases Starting January 1st, 2023
On April 19th, 2021, the Canadian government announced that it would be implementing a foreign buyer ban on real estate purchases starting January 1st, 2023. This new law from Bill C-19 will prohibit foreign buyers (both people and commercial enterprises) from purchasing a property in Canada for a period of two years. This ban, which is the first of its kind in Canada, has been met with both praise and criticism from residents and experts alike. It is intended to address housing affordability for Canadians, which has been affected by recent years of rising prices and shortages of homes in competitive markets.
Under the new law, foreign buyers will be prohibited from purchasing any type of property across Canada for a period of two years. This includes single-family homes, condominiums, land parcels, and investment properties. If you are a foreign buyer who is currently in the process of purchasing a property in Montreal, it is important to understand that the ban will apply to you as well. You will not be allowed to complete the purchase of your property if it is set to occur after January 1st. If there is a breach in the law, the buyer and any individuals who knowingly assisted in the purchase can be fined up to 10,000$CAN and be forced to resell the property, at a price equal to or lesser than the acquisition cost. This is meant to forbid the buyer from making a profit from the purchase.
There are a variety of exceptions to the ban. For example, permanent residents, diplomats, consular staff, members of international organizations living in Canada, and foreign nationals with temporary resident statuses are all exempt from the ban. Also, international students (currently enrolled in post-secondary school) who have spent the majority of the previous five years in Canada and want to purchase a property of less than $500,000 may do so. Moreover, buildings with more than three residential units as well as recreational properties (such as vacation homes) are also exempt. It is important to note that the ban on foreign buyers is not permanent, and it is set to expire after two years. However, it is unclear whether the ban will be extended beyond this time period or if it will be lifted altogether. It is important to stay informed about any changes to the law and how they may come to affect Montreal’s real estate market.
This law is intended to decrease competition for available properties, meaning that prices could remain relatively low compared to other cities with similar populations and amenities. Additionally, since there will no longer be any non-resident buyers competing for properties, it is argued that it may become easier for Canada investors to find their ideal property at a reasonable price point. However, it remains to be seen how exactly the ban will affect the real estate markets across Canadian cities.
While it is too soon to tell what the exact effects of this new ban will be, investors should keep it in mind, it’s certainly worth keeping an eye on.
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