Ban on Non-Canadians Buying Residential Property

Summary#

Prohibition on the Purchase of Residential Property by Non-Canadians Regulations: SOR/2022-250 put final details in place for the law that stops people who are not Canadian citizens or permanent residents from buying most housing in Canada for two years. The rules set who is exempt, what types of property are excluded, and how penalties or court-ordered sales would work. These Regulations take effect on January 1, 2023.

What it does#

• Defines key words the law uses, including what “control” means (ownership or voting interests of 3% or more).
• Clarifies which properties are not covered by the ban:
  • Properties located outside a census metropolitan area or census agglomeration are excluded.
  • Vacant land inside those census areas that has no habitable dwelling and is zoned residential or mixed use is also excluded.
• Defines “purchase” as getting a legal or equitable interest in a property. It says some transfers are not treated as purchases, including:
  • transfers because of death, divorce, separation or a gift;
  • renting a dwelling to a tenant;
  • transfers under a trust created before the law came into force;
  • transfers after a creditor enforces a security interest.
• Sets conditions under which some temporary residents may buy:
  • Students must have filed income tax returns for five taxation years, been physically present in Canada at least 244 days in each of those five calendar years, have a purchase price at or below $500,000, and may not have bought more than one residential property.
  • Workers must have worked in Canada for at least three years within the four years before the purchase, filed required tax returns for at least three of those four taxation years, and may not have bought more than one residential property.
• Lists classes of people who are exempt, including:
  • foreign diplomats and consular staff with certain passport stamps;
  • people granted temporary resident status on public-policy grounds (for safe haven);
  • refugee claimants whose claims have been found eligible and referred to the Refugee Protection Division.
• Explains how a court-ordered sale would work if a property was bought in breach of the law:
  • the non-Canadian must own the property when the order is made;
  • people who could be entitled to sale proceeds must be given notice;
  • the court must find the order proportionate to the breach;
  • sale proceeds are paid out in this order: costs (including prosecution costs and unpaid fines), payments to others entitled, repayment to the non-Canadian up to the purchase price, and any remaining amount to the Receiver General for Canada.
• Says the ban does not apply where it would conflict with Indigenous rights recognized by section 35 of the Constitution Act, 1982.
• Confirms penalties: a person who knowingly helps a non-Canadian break the prohibition can face a fine of up to $10,000 on summary conviction.
• The Regulations state they will be repealed when section 236 of the Budget Implementation Act, 2022, No. 1 comes into force (the exact date for that repeal is not given in the Regulations).

Who's affected#

• Non-Canadian buyers (people who are not Canadian citizens or permanent residents) are the main group targeted by the law.
• Some temporary residents may still be able to buy if they meet the student or worker conditions described above.
• Diplomats, people fleeing certain conflicts, and eligible refugee claimants are excluded from the ban.
• Real estate professionals, lawyers and other Canadian professionals who facilitate property sales may need to check eligibility. The Regulations say these professionals are not given enforcement duties, but they may see a small increase in work to verify eligibility.
• The Regulations estimate the number of non-Canadians who would qualify and choose to buy during the measure is limited to hundreds to low thousands over the two‑year period.
• It is unclear, from the text of the Regulations alone, exactly how many people or which local housing markets will be noticeably affected.

Why it matters#

• The measure is meant to reduce demand for residential property from non-Canadians in the short term as part of the federal response to housing affordability concerns.
• The Regulations add targeted exceptions so students, workers moving toward permanent residency, diplomats and people escaping crises are not unfairly blocked from buying a home.
• Buyers, sellers and property professionals will need to know the new rules to avoid fines or possible court-ordered sales of properties bought in breach of the ban.
• The rules are temporary. They are tied to the two‑year prohibition in the Act and to a later repeal trigger in federal legislation, so the effects on the housing market are meant to be time-limited.