For many years foreign buyers also known as international investors or non-resident’s were allowed to purchase real estate in Canada. There were even mortgage products suited for them. In the passage of time this has caused, or is one of the reasons, real estate values to rise year over year bringing us to the challenges many Canadians are now facing with unaffordable home prices.
In an attempt to cool off the hot real estate market the Government of Canada has implemented a two year foreign buyer ban on foreigners wanting to purchase real estate here in Canada. The “Prohibition on the Purchase of Residential Property by Non-Canadians Act” was assented on 23 June 2022. This is “an Act to prohibit the purchase of residential property by non-Canadians” and will be enforced starting 1 January 2023.
The Canada Mortgage and Housing Corporation has a great summary of the new rules under this act on their website including a FAQ.
For your ease of reference we are shaing with you here CMHC’s summary of the legislation:
The Act prohibits non-Canadians from purchasing residential property in Canada for 2 years. This act doesn’t affect Canadians and permanent residents. There may be exemptions for certain groups of people, types of residential property, and particular circumstances – these have not yet been established. (Once we’ve reviewed your feedback, we can establish the exemptions.)
- restricts non-Canadians from avoiding the prohibition by using corporations or other entities to purchase residential property
- allows the Government to clarify the scope and application of the prohibition, including by defining what is meant by “control,” and further elaborating what constitutes a “purchase”
- establishes penalties for non-compliance applicable to non-Canadians and any person or entity knowingly assisting a non-Canadian in contravening the Act
Any person or entity that knowingly assists a non-Canadian in contravening the prohibition, is guilty of an offence and liable on summary conviction to a fine of up to $10,000.
If a non-Canadian is convicted of having contravened the prohibition, the superior court of the province in which the residential property to which the contravention relates is situated may, on application of the responsible Minister, order the residential property to be sold.
The Act establishes that any such court-ordered sale will result in the non-Canadian receiving no more than the purchase price paid for the residential property.
Contact Trusterra Mortgage with all your real estate financing inquries. We are ready to help you.