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Federal government extends foreign buyer ban until 2027
2/4/2024 | Posted in Foreign Buyers by Paul DeAdder | Back to Main Blog Page
The federal government today announced a two-year extension to its foreign buyer ban in what it says is an effort to make housing more affordable for Canadians.
The announcement was made by Deputy Prime Minister Chrystia Freeland, who called the ban a tool that is helping to ensure homes are available to Canadian families rather than becoming a “speculative financial asset class.”
“The government is intent on using all possible tools to make housing more affordable for Canadians across the country,” she said in a statement.
Officially known as the Prohibition on the Purchase of Residential Property by Non-Canadians Act, the two-year ban first came into effect on January 1, 2023. The extension means the ban will remain in effect until January 1, 2027.
Non-Canadians are prohibited from purchasing residential real estate under the law. There are a number of exemptions, notably for recreational properties, buildings with more than three units, international students and refugees/refugee claimants.
In March 2023, the federal government unveiled a number of amendments to the exemptions, including for non-Canadian work permit holders, vacant land and development purchases.
The amendments also increased the permitted threshold for foreign control in residential property purchases, raising it from 3% to 10% in response to developer concerns.
In its statement, the government said the two-year extension to the ban is “just one part of the federal government’s economic plan to make housing more affordable for Canadians.”
Housing affordability remains a top concern
Housing affordability remains a top concern for many Canadians, second only to inflation, according to a 2023 survey by TransUnion.
In its 2023 Fall Economic Statement, the federal government unveiled $6.3 billion in new spending that it said was related to housing affordability initiatives.
Affordability has deteriorated in recent years not only due to a surge in home prices throughout the pandemic, but also thanks to the fastest pace of interest rate hikes in Canada’s history by the Bank of Canada.
The situation has been exacerbated by Canada’s housing supply, which has consistently failed to keep pace with demand.
The Canada Mortgage and Housing Corporation (CMHC) estimates Canada needs about 3.5 million additional housing units by 2023—above and beyond the current rate of construction—to restore affordability.
Source: Canadian Mortgage Trends
