Parliament Hill, Ottawa, Ontario, Canada

Foreign Buyer Ban (FBB) Update

The “Prohibition on the Purchase of Residential Property by Non-Canadians Act,” which came into effect on January 1st of this year, prohibits non-Canadians from engaging in several prescribed real estate activities. The stated goal – to take pressure off the price of housing with a view to improving affordability.

While organized real estate did harbour some reservation, the Act did at first glance assuage some important concerns of policy makers. With the passage of time, pundits have speculated   that Canada’s foreign homebuyer ban may have unintended consequences that could harm the real estate market, and negatively impact others.

Encouragingly, on March 27, 2023, the Honourable Ahmed Hussen, Minister of Housing and Diversity and Inclusion, announced amendments to the regulations accompanying the Prohibition on the Purchase of Residential Property by Non-Canadians Act.

To enhance the flexibility of newcomers and businesses looking to add to Canada’s housing supply, the Government of Canada is now intent to expand exceptions to allow Non-Canadians to purchase a residential property in certain circumstances. These amendments will further support individuals and families seeking to build a life in Canada by pursuing home ownership in their communities sooner and address housing supply issues. 

More specifically, the following amendments, coming into force on March 27, 2023, were announced by the Minister of Housing and Diversity and Inclusion:

  • Enabling work permit holders to purchase a home to live in while working in Canada.

The amendments will allow those who hold a work permit or are authorized to work in Canada under the Immigration and Refugee Protection Regulations to purchase residential property. Work permit holders are eligible if they have 183 days or more of validity remaining on their work permit or work authorization at the time of purchase, and they have not purchased more than one residential property. This is a significant change from the soon to be repealed provisions that required tax filings and previous work experience in Canada.

  • Repealing existing provision so the prohibition doesn’t apply to vacant land.

The amendments also repeal the provision that prohibited non-Canadians from purchasing vacant land zoned for residential and mixed use. This means that non-Canadians can now purchase such vacant land and use it for any purpose, including residential development.

  • Exception for development purposes.

Another exception that will benefit non-Canadians is the ability to purchase residential property for the purpose of development. This exception extends to publicly traded entities formed under federal and provincial laws and controlled by a non-Canadian.

  • Increasing the corporation foreign control threshold from 3% to 10%.

Finally, privately held corporations or entities formed under federal and provincial laws and controlled by a non-Canadian are now exempt from the prohibition on foreign ownership, as long as they meet the new 10% (versus the earlier 3%) foreign control threshold. This aligns with the definition of ‘specified Canadian Corporation’ in the Underused Housing Tax Act.

These changes may impact the Fraser Valley, as it increases the pool of buyers that will be able to invest in the local real estate market. The amendments are intended to encourage more development and help to alleviate the current housing shortage.

The FVREB and its SGRC (Stakeholder & Government Relations Committee) will continue to monitor the effects of this legislation on our catchment area while supporting strategies that increase housing stock and foster affordability.

Source: Professional Standards