Canada’s Government Extends Prohibition on Foreign Purchases of Residential Properties

In a release on Sunday, Finance Minister Chrystia Freeland announced the federal government’s decision to prolong the ban on foreign home purchasing in Canada. Initially introduced in 2022, the regulation will now remain effective until the start of 2027. The ban prohibits foreign nationals and commercial entities from acquiring residential properties in Canada, although certain exceptions apply to international students, refugee claimants, and temporary workers.

While the policy has been in place, experts have raised doubts about its impact on housing affordability in Canada, citing the relatively minor portion of the housing market owned by non-Canadians. For instance, in 2020, the share of the market held by non-residents in certain provinces ranged from two to six per cent.

In 2021, in British Columbia, only about 1.1 percent of home sales involved a foreign buyer. Moreover, there are additional exemptions to the home buying regulations that permit the acquisition of buildings containing four or more residences, or in select sparsely populated regions.

Several provinces across Canada had already implemented taxes targeting foreign home buyers, with Toronto recently proposing a municipal levy on residential purchases made by non-Canadians.

Housing has emerged as a significant political issue as Canadians confront a pressing affordability crisis. According to the Canada Mortgage and Housing Corporation (CMHC), an additional 3.5 million homes beyond expected growth must be constructed by 2030 to address affordability concerns.

Conservative Leader Pierre Poilievre has emphasized the housing crunch as a central aspect of his political criticism against the governing Liberals, characterizing the situation as “housing hell.”

To address the issue, Poilievre has put forth a range of proposals aimed at increasing housing starts. These include offering incentives to municipalities that achieve ambitious housing targets, leveraging federal funds as rewards, and implementing penalties for those that fall short.

In response to the crisis, the federal government has initiated several measures, such as engaging in negotiations with major cities. These discussions aim to link federal funding from the Housing Accelerator Fund to zoning reforms and other pro-building policy adjustments at the municipal level.