Foreign citizens and companies will be prohibited from buying residential real estate in Canada until 2027, said the Federal Finance Minister Chrystia Freeland.
Under the ban, which came into force last year and was set to expire in early 2025, foreign businesses and persons who are not Canadian citizens or permanent residents are prohibited from purchasing residential property in Canada.
There are some exceptions, including those with temporary work permits, refugee claimants and international students who meet certain criteria.
Non-Canadians found violating the ban will be fined up to $10,000 and ordered to sell their property.
“By extending the foreign buyer ban, we will ensure houses 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 is intent on using all possible tools to make housing more affordable for Canadians across the country”, the minister added.
The federal government wants to extend the program for two more years because it knows Canada's housing problem won't be solved by the end of 2024 and wants to see how the market changes. Much of the data related to the ban remains preliminary, even from the private sector, since it has only been in place for a year, Canada's finance minister's office said.
Statistics Canada data for 2020, the latest year on record, showed that 7% of B.C.'s condominiums were owned by non-residents for investment purposes. In Ontario, the figure was 5.6%. The investment properties were concentrated in the downtown cores of Vancouver and Toronto, the data shows.
Tom Davidoff, associate professor at the UBC’s Sauder School of Business, questioned whether the move would have a big impact on overall housing affordability. While he saw no pressing need to repeal the measure, he said the combination of taxes on empty homes and provincial taxes on foreign buyers have taken the air out of the foreign buying phenomenon.
“How much juice is left in that lemon to squeeze? Because foreign buying has been obliterated in B.C. and Ontario by these taxes and so you’re left with markets that have been less adversely impacted,” Davidoff said in a phone interview.
However, in response to criticism, the government argues that the ban is not intended as a magic solution to a complex problem, but instead presents it as a single tool in a wide range of measures it is using to solve Canada's housing problems.
Source: Vancouver Sun