Starting in January 2023, the new Federally Legislated Act will prohibit individuals who are not Canadian citizens or permanent residents of Canada (collectively, “non-Canadians”) from purchasing residential property in Canada for a period of two years. The prohibition also applies to corporations that are not incorporated in Canada or are controlled by non-Canadians.
Additional details regarding the prohibition will be addressed in supporting regulations from the federal government, which are expected to be issued before January 1, 2023.
While the Act does not directly impact the provision of real estate services or mortgage lending, it does introduce restrictions to future agreements of purchase and sale of residential property that regulated entities should be aware of. The Act:
- Prohibits non-Canadians from directly or indirectly purchasing residential property in Canada for a period of two years, which includes purchases made through corporations, trusts, or other legal entities;
- Applies to residential property, which includes detached homes or similar buildings of one to three dwelling units as well as parts of buildings such as semi-detached houses, strata units, or other similar premises;
- Establishes penalties for non-compliance applicable to non-Canadians, as well as any person or entity knowingly assisting a non-Canadian in contravening the prohibition;
- Establishes that a contravention of the prohibition could result in a court-ordered sale of the residential property, which would result in the non-Canadian receiving no more than the purchase price paid for the property; and
- Sets out exemptions for certain classes of people such as: refugees, individuals who purchase residential property with their spouse or common-law partner (provided the spouse or common-law partner is eligible to purchase residential property), temporary residents in Canada who satisfy the prescribed conditions in the regulations, and other classes of persons set out in the regulations.
- Exceptions to note:
- Includes properties in Census Metropolitan Areas and Census Agglomerations
- Does not appear to be Not valid in the North Okanagan – see Excluded Residential Properties on attached release
To learn more, please refer to:
- The Prohibition on the Purchase of Residential Property by Non-Canadians Act;
- The Department of Finance Canada’s news release;
- Canada Mortgage and Housing Corporation’s news release and FAQ