Federal Government Amends the Foreign Buyers Ban Regulations
From BCREA website:
This is a summary of the below announcement from BCREA.
The amendments to the Foreign Buyers Ban in Canada, effective from March 27, 2023, bring significant changes to who can purchase residential property in the country:
- Work Permit Holders Eligible: Work permit holders or those authorized to work in Canada can now purchase residential property to live in while working in Canada. They must have at least 183 days of validity remaining on their work permit or work authorization at the time of purchase and must not already own more than one residential property. Previous requirements related to tax filings and work experience in Canada have been repealed.
- Prohibition on Vacant Land Lifted: The prohibition on non-Canadians purchasing vacant land zoned for residential and mixed use has been repealed. Non-Canadians can now buy such land for various purposes, including residential development.
- Exception for Development: Non-Canadians are allowed to purchase residential property for development purposes. This exception is extended to publicly traded entities formed under Canadian laws and controlled by non-Canadians.
- Increased Control Threshold: The control threshold for privately held corporations or entities formed under Canadian laws and controlled by non-Canadians has been raised from 3 percent to 10 percent, aligning it with the Underused Housing Tax Act's definition of 'specified Canadian Corporation.'
- BC Real Estate Association's Stance: The BC Real Estate Association welcomes these amendments for providing greater flexibility to newcomers and businesses, but it remains opposed to the assertion that foreign ownership significantly affects Canadian housing attainability. The federal government's hasty policy-making process and lack of sectoral consultation are criticized for causing negative unintended consequences in the legislation's implementation. This highlights a concerning trend in government policy-making without sufficient consultation with major economic sectors.
Original announcement from BCREA's website:
On March 27, 2023, the federal government announced amendments to the Prohibition on the Purchase of Residential Property by Non-Canadians Act’s (the Act) accompanying Regulations, effective March 27, 2023. The Act was passed in June 2022 and the regulations came into force January 1, 2023.
Here’s what you need to know about the amendments to the Foreign Buyers Ban.
Enable more work permit holders to purchase a home to live in while working in Canada.
The amendments allow those who hold a work permit or are authorized to work in Canada under the Immigration and Refugee Protection Regulations to purchase residential property. Work permit holders are eligible if they have 183 days or more of validity remaining on their work permit or work authorization at time of purchase and they have not purchased more than one residential property. The current provisions on tax filings and previous work experience in Canada are being repealed.
Repealing existing provision so the prohibition doesn’t apply to vacant land.
Repealing section 3(2) of the regulations, so the prohibition does not apply to all lands zoned for residential and mixed use. Vacant land zoned for residential and mixed use can now be purchased by non-Canadians and used for any purpose by the purchaser, including residential development.
Exception for development purposes.
This exception allows non-Canadians to purchase residential property for the purpose of development. The amendments also extend the exception currently applicable to publicly traded corporations under the Act, to publicly traded entities formed under the laws of Canada or a province, and controlled by a non-Canadian.
Increasing the corporation foreign control threshold from 3 per cent to 10 per cent.
For the purposes of the Prohibition, with regards to privately held corporations or privately held entities formed under the laws of Canada or a province and controlled by a non-Canadian, the control threshold has increased from 3 per cent to 10 per cent. This aligns with the Underused Housing Tax Act's definition of ‘specified Canadian Corporation’.
While the BC Real Estate Association (BCREA) welcomes these amendments because they provide greater flexibility to newcomers and businesses seeking to contribute to Canada, we remain opposed to the legislation’s highly political and largely non-evidential assertion that foreign ownership plays a significant role in Canadian housing attainability.
The federal government’s need to amend this policy demonstrates its overly hasty policy-making process. The negative unintended consequences that necessitated the amendments could have been mitigated with proactive, fulsome sectoral consultation. The negative fallout from this legislation once again highlights a concerning trend at all levels of government to implement policy affecting major economic sectors without adequate advance sectoral consultation.