Effective January 1, 2023, foreign buyers will be prohibited from purchasing residential property in Canada for a period of two years in an attempt to address the inflation of housing prices. The following article highlights the key points in the policy.

Foreign Buyer Ban in Effect January 1, 2023

The Prohibition on the Purchase of Residential Property by Non-Canadians Actwill be in effect as of January 1, 2023. The Act prohibits non-citizens and non-permanent residents from purchasing residential property in Canada for two years. This is a response from the Government on Canada on the public concerns surrounding the inflation of housing prices.

The Act also restricts non-Canadians from using corporations or other entities to purchase residential property to avoid the ban. Both the non-Canadian purchaser of prohibited property and any person or entity that knowingly assists in the purchase can be fined up to $10,000 and the property can be forced to be sold.

The Act will not apply to temporary residents; non-Canadians who purchase residential property with their spouse or common-law partner as long as the spouse or common-law partner is eligible to purchase residential property in Canada; protected persons; and for other prescribed circumstances. The government’s consultation paper proposed that certain exemptions will be given to students and workers eligible for work permits who meet certain criteria.

The final regulations outlining how the prohibitions will work have not yet been released. The regulations will provide greater clarity on the Act, including any exceptions. We will continue to keep you informed of any developments as they arise.

How does the Foreign Buyer Ban Impact Mortgage Professionals?

Mortgage professionals, along with realtors, lawyers and notaries owe their clients an obligation to inform. The legislation does not rely on mortgage professionals to enforce the ban, however it does allow for penalties to be imposed on any party found guilty of knowingly assisting those restricted under the act in violating the prohibition.

Written by: Jasmine Toor, Director of Public Relations, Mortgage Professionals of Canada