Canada Extends Its Foreign Buyer Ban on Residential Property to 2027

The Department of Finance announcement confirms that foreign commercial enterprises and people who are not Canadian citizens or permanent residents will continue to be barred from buying residential property in Canada under the Prohibition on the Purchase of Residential Property by Non-Canadians Act, which Parliament passed in 2022. The Deputy Prime Minister and Minister of Finance presented the extension as a way to ensure that homes are used by Canadian families to live in rather than held as investments.

How the foreign buyer ban works

The Act and its regulations took effect on 1 January 2023. They were amended with effect from 27 March 2023, according to a news release from the Canada Mortgage and Housing Corporation. The amendments allow work permit holders with at least 183 days of validity remaining to buy a home, provided they have not bought more than one residential property. Vacant land zoned for residential or mixed use was taken out of the prohibition, an exception was added for purchases made for development, and the exception for publicly traded entities was widened.

The amendments also raised the control threshold for privately held corporations and entities formed under Canadian law and controlled by a non-Canadian from 3% to 10%, aligning it with the definition of a specified Canadian corporation in the Underused Housing Tax Act.

Who is affected

Non-resident individuals, foreign-controlled companies and investment vehicles that hold Canadian residential property will have to work within the restrictions for a further two years. Buyers relying on one of the exceptions, such as the development or work permit exceptions, should check that they still meet the conditions at the time of purchase. The extension also gives lenders, sellers and their advisers longer certainty about the rules that apply to purchasers who are not citizens or permanent residents.

Wider housing measures

The announcement sits within a broader federal housing plan that the department set out alongside it, including the removal of the GST on new rental housing, the Apartment Construction Loan Program, the Housing Accelerator Fund and the Tax-Free First Home Savings Account. The foreign buyer ban is now scheduled to lapse on 1 January 2027 unless it is extended again.

Sources

• Department of Finance Canada: Government announces two-year extension to ban on foreign ownership of Canadian housing
• Canada Mortgage and Housing Corporation: Amendments to the Prohibition on the Purchase of Residential Property by Non-Canadians Act's accompanying Regulations