The Prohibition on the Purchase of Residential Property by Non-Canadians Act came into force on January 1, 2023. The Act is commonly referred to as the “Foreign Buyer Ban”. The Foreign Buyer Ban was amended on March 27, 2023, to expand and create new exemptions, which are as follows:
The Foreign Buyer Ban no longer applies to work permit holders. Now, those who hold a work permit or are authorized to work in Canada are allowed to purchase residential property. This exception will apply so long as the permit holders have 183 days of validity, or more, remaining on their permit, and have not purchased more than one residential property.
The Foreign Buyer Ban allows non-Canadians to purchase residential property for the purpose of development. Note that this will likely not include leasing or renting the property out to tenants or otherwise managing property as a rental property as part of a portfolio. Also, repairs, renovations and remodeling do not count as “development”, only expansions or remodels that are equivalent to constructing a new building or changing the use of a property.
The Foreign Buyer Ban no longer applies to Vacant Land. Non-Canadians can now purchase vacant land zoned for residential use and use it for any purpose.
The Foreign Control Threshold is now 10%. Previously, an entity was deemed foreign if non-Canadians owned 3% or more of it. With the amendment, the maximum amount of non-Canadian control is 10%.
Since the pronouncement of the Act, its related Regulations and Amendments, we have received a number of questions from our real estate partners and potential clients. We have endeavoured to answer those questions below. However, we caution that the Act is in its infancy and there remains some uncertainty on its impact in certain scenarios.
The Act excludes properties located outside of certain geographic areas. These areas are defined as a Census Agglomeration (“CA”) or a Census Metropolitan Area (“CMA”).
In essence, these are significant population centers and their surrounding region. What makes a town or city significant, or how much of the surrounding region ought to be included in its CA or CMA is a complex determination. Importantly, a town or city’s population is not determinative of the matter.
Statistics Canada has links to maps of each CA and CMA on its website:
It is also possible to do a “Geosearch” of town/city and/or a property’s Parcel Identifier (PID). The search results will reveal the census data, including whether the property is within a CA or CMA:
[As for the examples above, Whistler and Gibsons are NOT subject to the ban. Anmore is within the Vancouver CMA and is, therefore, subject to the ban.]
When buying within a housing cooperative, the purchaser is technically buying shares in an association that is incorporated under Cooperative Association Act. The housing cooperative remains the owner of the lands and building(s).
In virtually all housing cooperatives, the association will own a building or buildings with more than 3 dwelling units. Further, none of the dwelling units are “owned, or intended to be owned, apart from any other unit in the building”. Thus, it seems that a housing cooperative does not meet the Act’s definition of residential property.
There does not seem to be an obvious difference between conventional condominiums and housing cooperatives insofar as the policy behind the Act is concerned. That is, it is not clear why a housing cooperative would be excluded from the prohibition.
All this said, there is no industry consensus on the application of the Act with respect to housing cooperatives. We expect to have an update on this question once the industry (or Federal Government) has considered it.
Yes, the Act applies to leasehold properties. The definition of “purchase” includes a legal or equitable interest in residential property. The purchase of a leasehold interest in a dwelling unit meets the criteria for “purchase” and “residential property” (as defined by the Act and Regulations).
There is no exception for leasehold property within First Nations lands. That is, a non-Canadian is prohibited from purchasing a leasehold interest on First Nations lands (unless there is an applicable exemption).
Provided that the adult child is acquiring both the legal AND beneficial interest in the property, then the acquisition of the property is a permitted purchase under the Act. It does not matter that the purchaser obtained the funds from a non-Canadian provided that the non-Canadian is not obtaining any equitable (beneficial) interest.
If the child is holding the property “in trust” for the non-Canadian parent, this would be a prohibited purchase.
A work permit is not sufficient, in and of itself, to qualify a non-Canadian for an exemption. In addition to having a current work permit, the non-Canadian must have worked full-time for three of the previous years, have filed all “required” tax returns in that same period, and have not purchased any other property.
There is no particular “type” of work permit that is required. A work permit is broadly defined as an “authorization to work in Canada issued by an officer to a foreign national”. This exemption is not related in any way to the Provincial Nominee Program and related exemption from Additional Property Transfer Tax.
“Rent to Own” is a bit of jargon that is used loosely and may imply different types of arrangements.
If the “rent to own” is an Agreement for Sale (registered as a Right to Purchase), then registration of that interest in lands and would be prohibited. An Agreement for Sale is notable in that it also triggers the payment of Property Transfer Tax at the outset of the transaction, even before legal title to the property is conveyed.
Other “rent to own” arrangements are more of a marketing tool where a landlord (usually a developer) agrees to credit a tenant with a portion of their rent towards a theoretical future purchase. This “rent to own” arrangement provides only contractual rights and is not an acquisition of a legal or equitable interest in any particular property.
At the end of the day, whether the Act will prohibit the arrangement will be fact specific.
The Act is federal legislation. The Property Transfer Tax Act is provincial legislation. The two Acts are unrelated and do not share the same exemptions. It is possible that a non-Canadian is permitted to purchase residential property (for example, if they qualify under the work permit exemption), but have to pay Additional Property Transfer Tax.
This question may be based on a misunderstanding of the following “exception:
Exceptions
(2) However, a purchase referred to in subsection (1) does not include
…
(b) the rental of a dwelling unit to a tenant for the purpose of its occupation by the tenant;
This exception makes it clear the non-Canadians can be rental tenants. It does not allow them to purchase property to rent it out.
If the son is not a non-Canadian and is acquiring the legal AND beneficial interest in the property, then there is no issue that the funds have been gifted by a non-Canadian.
However, if the son is a non-Canadian and is seeking an exemption based on being a “full time student”, it must be noted that the “student” exception is very restrictive. In addition to the institution meeting certain requirements, the following must be met:
In essence, these are significant population centers and their surrounding region. What makes a town or city significant, or how much of the surrounding region ought to be included in its CA or CMA is a complex determination. Importantly, a town or city’s population is not determinative of the matter.
Statistics Canada has links to maps of each CA and CMA on its website:
It is also possible to do a “Geosearch” of town/city and/or a property’s Parcel Identifier (PID). The search results will reveal the census data, including whether the property is within a CA or CMA: