In late-December, when the Government of Canada announced the guidelines around the Prohibition on the Purchase of Residential Property by Non-Canadians Act, better known as the Foreign Buyer Ban, the Real Estate and related industries had little time to implement a foreign buyer ban that was to be in effect as of January 1st, 2023.
To enhance the flexibility of newcomers and businesses looking to add to Canada’s housing supply, the Government of Canada is making amendments to the Regulations and some of them can be game-changing for potential buyers who were previously impacted by the foreign buyer ban.
On March 27, 2023, the Government of Canada introduced a a series of amendments to the foreign buyer ban to expand the exceptions to the regulations and bring clarity to the act that has impacted buyers and industry professionals alike.
As of March 27, 2023, the following exceptions to the foreign buyer ban will come into force.
The Ban No Longer Applies to Work Permit Holders
This change will likely have the biggest impact as previously, work permit holders had to have worked full-time in Canada for at least 3 years within the 4 years preceding the year in which the purchase was made and have filed income tax returns for 3 of the 4 taxation years preceding the year in which the purchase was made.
Under the new amendment those who hold a work permit or are authorized to work in Canada are allowed to purchase residential property, so long as they have 183 days of validity, or more, remaining on their permit, and have not purchased more than one residential property.
Exemption for purchasing for the purpose of development
This new exception that allows non-Canadians to purchase residential property, if they plan to further develop the property. According to the CMHC, “development” encompasses expansions or remodels that are “tantamount to the construction of a new building or a change of use”, or essentially creating a new residential property. Unfortunately, repairs, renovations, or remodeling the property will not count as “development”.
The Ban No Longer Applies to Vacant Land
Under the previous regulations, vacant land zoned for residential use or mixed-use with residential could not be purchased by non-Canadians. With the new amendments, the prohibition does not apply to all lands zoned for residential and mixed use. With the change, non-Canadians can now purchase vacant land zoned for residential use and use it for any purpose.
The Foreign Control Threshold is Now 10%
Previously, privately held corporations or privately held entities formed under the laws of Canada or a province could not have purchased a property under the foreign buyer ban if their non-Canadian ownership was more than 3%. With the changes, the control threshold has increased from 3% to 10%. This aligns with the definition of ‘specified Canadian Corporation’ in the Underused Housing Tax Act.
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