Market Update – New Federal Laws for the Purchase of Residential Property
On January 1st, 2023, the Canadian government implemented a new legislation aimed at increasing affordability and making own ownership more attainable for residents.
The act, known as the Prohibition on the Purchase of Residential Property by Non-Canadians, prohibits non-Canadians and corporations controlled by non-Canadians from buying residential properties in the country for a period of 2 years.
Before the regulations were developed, the government solicited feedback from the public. The consultation document, which contained specific policy proposals, was open for comments during a 4-week period in August and September of 2022.
The consultation process received around 200 written submissions from individuals and relevant parties.
- The Prohibition on the Purchase of Residential Property by Non-Canadians Act prohibits non-Canadians from purchasing residential properties in Canada for 2 years, starting January 1, 2023
- Residential property is defined as buildings with 3 homes or less, including semi-detached houses and condominium units.
- The act imposes a fine of $10,000 for any non-Canadian or anyone who knowingly assists a non-Canadian and is found guilty of violating the act. A court may also order the sale of the property if a non-Canadian is found to have violated the law
The law does not apply to:
- larger buildings with multiple units (more than 3 homes)
- Permanent Resident’s of Canada
- Non-Canadians who are looking to rent.
- Temporary Resident’s studying in Canada (property cannot exceed a price of $500,000)
- Temporary Resident’s working in Canada
- Refugee Claimants
- Non- Canadian Spouses and common-law partners
- Residential properties outside of a Census Metropolitan Area or Census Agglomerations (Ex – Vernon, Tofino, Big White, Merritt, Golden, Port Hardy, Fernie, Princeton)
- Canadian-based corporations controlled by a Canadian
- Those who acquire a residential property because of divorce, separation, gift or death
What does this mean for our market:
- Keep in mind that according to the StatsCan, non-residents only make up less than 4% of residential property owners in most parts of Canada (4.7% in BC).
- It has been forecasted that interest rates will start to lower as soon as the 2nd quarter of 2023 and will balance out by 2024.
- Market inventory is increasing meaning more options for buyers and a great time to build your real estate portfolio!
If you have any questions or would like to discuss with a VIRANI Advisor please let us know, 604.695.1000 or [email protected].Sources: Statistics Canada, Financial Post