In an attempt to address the ongoing housing supply and affordability crisis in Canada, the federal government announced earlier this month that the Prohibition on the Purchase of Residential Property by Non-Canadians Act – otherwise known as the foreign buyer ban – will be extended for an additional two years. The Act was previously set to expire on January 1st, 2025, and has been extended to January 1st, 2027.
The Liberals say the ban, which restricts foreign commercial enterprises and individuals who are not Canadian citizens or permanent residents from acquiring residential properties in Canada, is part of a broader strategy to cool the nation’s overheated housing market and make home ownership more attainable for Canadian citizens.
Given that housing affordability has not greatly improved since the Act’s implementation more than a year ago, Royal LePage believes that an extension to the foreign buyer ban will not make a material difference on bettering access to housing for Canadians.
“We do not foresee an extension to the foreign buyer ban resulting in a drastic improvement to housing affordability. Non-Canadian property ownership makes up a small percentage of the overall housing market, therefore a ban on such ownership is not likely to improve access to housing in a material way,” said Karen Yolevski, COO, Royal LePage Real Estate Services Ltd. “Given the imbalance between available inventory and buyer demand, the best way to solve Canada’s housing crisis is to significantly increase supply.”
The ban comes with specific exceptions, notably for individuals holding temporary work permits, refugee claimants, and international students who fulfill certain conditions. Those in violation of the ban could face penalties up to $10,000 and may be compelled to sell the implicated property.
More information is available on the government’s website.