In this paragraph we will let you know who are foreign buyers. They are international investors or non-resident’s. For a long time they were allowed to purchase real estate in Canada. There were even mortgage products specially designed for them. This is one of the contributing factors to unusually high home values. This add’s to the challenges many Canadians are now facing with unaffordable home prices.
It’s important to know the foreign buyer ban was introduced to help cool off the hot real estate market. The “Prohibition on the Purchase of Residential Property by Non-Canadians Act” was assented on 23 June 2022. It’s purpose is to “prohibit the purchase of residential property by non-Canadians”. On 1 January 2023 the enforcement began.
The Canada Mortgage and Housing Corporation has helpful information of the new rules on their website.
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.
- 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.
Therefore, non-Canadian’s convicted of having contravened the prohibition, may, on application of the responsible Minister, be ordered to sell the residential property.
In conclusion, 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.