Residential Market Commentary - Foreign Ownership Changes

The Canadian government’s ban on home ownership by foreigners appears to be in line for a major rethink. 

The “Prohibition on the Purchase of Residential Property by Non-Canadians Act” first surfaced during the 2021 federal election campaign.  It was supposed to reduce housing demand and ease prices that had spiraled out of reach for many hopeful buyers. 

The act was implemented in 2022 and is set to expire on January 1, 2027.  A report by the law firm Borden, Ladner and Gervais (BLG) says “the Carney government is actively considering a new approach rather than a straight extension of the current prohibition.” 

The restrictions do have strong public support.  A poll taken last year suggests 76% of Canadians are in favour of the ban but several analysts say it has not been effective. 

Economist Michael Moffatt, founding Director of the Missing Middle Initiative, said the ban largely duplicated other rules that were in place to discourage owners, foreign and domestic, from leaving homes vacant. 

“The rules were … redundant.  This really just created another set of red tape, but it didn’t really seem to accomplish a whole lot,” he said. 

The government has not said what it plans to do, but the BLG report says Ottawa is looking at Australia’s tiered exemption model.  Those rules allow foreign investment in vacant land, new builds, and large-scale redevelopment projects. 

There have also been calls to loosen ownership rules for Americans.

- First National LP