June 30 2023
It's no secret that housing prices in Toronto and Vancouver are currently among the highest in the world – with the average home price in these cities hitting over $1 million. With rising inflation and interest rates, the prospect of homeownership for most Canadians has become increasingly out of reach. In response to these concerns, the Canadian government has introduced a two-year foreign homebuyers ban, effective January 1, 2023.
What is the foreign homebuyers ban?
The foreign homebuyers ban prohibits non-Canadian citizens and non-permanent residents from buying residential properties in the country – specifically in highly-populated areas such as the Greater Golden Horseshoe region in Ontario and the Metro Vancouver area in British Columbia.
This ban also discourages foreign investment by imposing higher property transfer taxes to non-Canadians. Those who violate the ban can be fined up to C$10,000 and may also be required to sell the property they purchased. Not to mention, if someone knowingly helps a non-Canadian with their home purchase, they could be subject to a fine too.
The overall purpose of this ban aims to make housing more affordable for Canadians. Rather than relying on foreign investment to drive up prices, the ban seeks to support local potential home buyers by increasing the supply of homes and creating new buying opportunities for Canadians who are eager to enter the market.
Who is exempt from it?
Although the foreign buyers ban generally stops people who are not citizens or permanent residents from buying certain types of properties, some exceptions apply. These include:
The impact of the foreign buyers ban
Since the foreign buyers ban only came into effect earlier this year, it's difficult to assess what the full impact will be. While the main goal is to make housing more affordable and the market less competitive, less foreign investment may also bring uncertainty to an already volatile real estate market. The best thing we can do is wait it out and see where these next few months take us.
It’s important to do your research as the rules and regulations of the foreign buyers ban can vary by province. At Homewise, our expert mortgage advisors understand these nuances and can support you with any questions you may have throughout the mortgage and home buying process.
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