Foreign citizens and businesses will be banned from purchasing residential property in Canada for two more years, the federal finance minister said on Sunday, the latest in a series of measures aimed at addressing housing affordability concerns that have dogged the liberal rulers for months.
Chrystia Freeland announced the extension in a statement, saying Canada will extend its ban on foreign home buyers until 2027.
Under the ban, which came into effect last year and was set to expire in early 2025, foreign business companies and people who are not Canadian citizens or permanent residents are prohibited from purchasing residential property in Canada.
There are some exceptions, including for those with temporary work permits, asylum seekers, and international students who meet certain criteria.
Non-Canadians who violate the ban would be fined up to $10,000 and ordered to sell the property.
“By extending the ban to foreign buyers, we will ensure that homes are used as homes for Canadian families to live in and do not become a speculative financial asset class,” Freeland said in the statement.
“The government intends to use every tool possible to make housing more affordable for Canadians across the country.”
The federal government said it wanted to extend the program two more years because it knows Canada’s housing challenge won’t be resolved by the end of 2024 and it wants to see how the market changes. Much of the data related to this ban remains preliminary, including from the private sector, because it has only been in effect for a year, Freeland’s office said.
Statistics Canada data from 2020, the most recent year on record, showed that seven per cent of British Columbia’s condo supply was owned by non-residents for investment purposes. The figure stood at 5.6 per cent in Ontario.
The federal government extends the ban on foreign buyers of Canadian homes until 2027. #CDNPoli #ForeignHomebuyerBan #HousingAffordability #ResidentialProperties
Investment properties were concentrated in downtown Vancouver and Toronto, the data shows.
Tom Davidoff, an associate professor at the University of British Columbia’s Sauder School of Business, questioned whether the measure would have much of an effect on overall housing affordability.
While he saw no pressing need to eliminate the measure, he said the combination of taxes on empty homes and provincial taxes on foreign buyers have taken the wind out of the foreign buying phenomenon.
“How much juice is left in that lemon to squeeze? Because foreign purchasing has been eliminated in British Columbia and Ontario by these taxes, so there are markets left that have been less negatively affected,” Davidoff said in a telephone interview.
But the government argues that the ban is not intended to be a magic solution to a complicated problem, but instead presents it as a single tool in a broad toolbox it is using to address Canada’s real estate challenges.
He says the ban on foreign homeowners works in conjunction with other measures he recently announced to increase the number of homes available to Canadians. That includes scrapping GST on new purpose-built rentals and distributing billions to councils for housing.
This report by The Canadian Press was first published Feb. 4, 2024.