Foreign Buyers Moratorium on Residential Real Estate
Ottawa creates a 2 year program to try and stem the tide of out-of-country buyers
The Prohibition on the Purchase of Residential Property by Non-Canadians Act (Act) comes into force on January 1, 2023. It prohibits the purchase of residential property in Canada by non-Canadians unless they are exempted by the Act or its regulations, or the purchase is made in certain circumstances specified in the regulations. This new legislation was just recently announced and will remain in force for two years and is part of the government of Canada’s response to soaring housing prices across the country.
The main provision of the Act is its prohibition on foreign ownership of residential property. Section 4(1) of the Act prohibits a non-Canadian from directly or indirectly purchasing any residential property in Canada.
The Act, Section 2 defines “residential property” to mean:
a. a detached house or similar building that contains up to and including three dwelling units, which are in turn defined as a “residential unit that contains private kitchen facilities, a private bath and a private living area”
b. a part of a building that is intended to be owned and used as a place of residence. This explicitly includes but is not limited to portions of semi-detached homes, rowhouse units, and residential condominium units.
The same provision defines “non-Canadian” to mean:
a. an individual who is neither a Canadian citizen nor a person registered as an Indian under the federal Indian Act nor a permanent resident.
b. a corporation that is not incorporated under the laws of Canada or a province; or
c. a corporation incorporated under the laws of Canada or a province whose shares are not listed on a stock exchange in Canada and is controlled by an individual or a corporation that is a non-Canadian.
