The topic of foreign real estate purchases has been contentious for years now. In this piece, we'll be exploring Canada's recent ban on foreign buyers, including the backstory, who might qualify for exemptions, and why the act was brought into effect in the first place.  Effective as of January 1, 2023, the Prohibition on the Purchase of Residential Property by Non-Canadians Act restricts non-Canadians from buying residential property in Canada. The ban was put into effect for a period of two years. In this context, “non-Canadians” refers to corporations and entities not listed on a Canadian stock exchange and controlled by non-Canadians. On the flip side, the Act in no way applies to Canadians, permanent residents, or temporary residents who meet the exception criteria outlined in the Regulations.

Exceptions: who is still allowed to buy?

Temporary residents who are studying in Canada may be exempt if they meet specific criteria, including enrollment in an authorized study program, filing annual income tax returns, meeting physical presence requirements (i.e. remaining inside the country for a specific length of time), and not having previously purchased a residential property during the prohibition period. 

Temporary residents who are employed in Canada with a valid work permit or work authorization may be exempt from the Act if they meet specific criteria, including a minimum validity period of 183 days remaining on their work permit and not having previously purchased a residential property during the prohibition period. 

Refugees who have been given refugee protection or are protected persons under the Immigration and Refugee Protection Act are exempt from this prohibition. Refugee claimants and individuals fleeing international crises may be eligible for an exception if they have made a claim for refugee protection or received temporary resident status based on humanitarian public policy considerations. 

Accredited members of foreign missions in Canada who have passports with valid diplomatic, consular, official, or special representative acceptance are also exempt from this prohibition. 

Non-Canadian spouses and common-law partners may purchase residential property in Canada if they buy it jointly with a Canadian citizen, a person registered under the Indian Act, a permanent resident, or a non-Canadian for whom the prohibition does not apply. The Act also acknowledges the Section 35 rights of 

Indigenous people and communities. It states that the prohibition does not apply if it conflicts with the rights recognized and affirmed by Section 35 of the Constitution Act, which was ratified in 1982. Furthermore, the Act provides an exception for residential properties located outside of Census Metropolitan Areas (CMA) or Census Agglomerations (CA). These areas are identified based on Statistics Canada's Standard Geographical Classification 2021. It's important to note that the Act defines residential property as buildings with three dwelling units or less. Larger buildings with four or more dwelling units are not subject to the same exceptions. Anyone who violates the prohibition may be subject to a hefty fine of up to $10,000. The court may also order them to sell their residential property.

Why was this new rule implemented?

The government of Canada wanted to stop speculative foreign investors from purchasing real estate in Canada, and therefore reducing the pool of properties available for Canadians to buy. The goal was to allow homes to be occupied and owned by Canadians. The initial rollout had some bumps in the road, but the most recent amendments seem to align with the Act's goal.  Before we dig deeper, bear in mind that the information we're sharing here is for general guidance purposes only,  it should not be considered legal or professional advice. We strongly recommend consulting with a trusted legal advisor before making any decisions or taking action based on this article.