Canada Foreign Buyer Ban Limited Impact and Loopholes in the Housing Market
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The Canada Mortgage and Housing Corp. (CMHC) implemented a ban on non-residents purchasing residential properties starting January 1, 2023. Originally projected to affect around two percent of annual home purchases, internal communications obtained by Global News from the first quarter of the year reveal discussions and concerns within the CMHC regarding the ban's impact. The Prohibition on the Purchase of Residential Property by Non-Canadians Act, passed in June 2022, restricts non-citizens, non-permanent residents, and foreign-controlled companies from buying properties in Canada for a two-year period. The ban, aimed at improving housing affordability, was later amended to include exemptions for international students and temporary residents.
According to CMHC estimates, approximately two percent of real estate purchases in 2021 were made by non-Canadians, affecting just over 13,000 transactions out of 670,000. Experts, including Tom Davidoff from the University of British Columbia’s Sauder School of Business, suggest that the ban's impact may be limited, especially in markets like B.C. and Toronto, where existing taxes on non-resident buyers already suppressed foreign purchases. As of the latest available data in 2021, 2.6 percent of Toronto's housing stock and 4.3 percent of Vancouver's were owned by non-residents. Some critics, including Re/Max Canada President Christopher Alexander, argue that the ban has been ineffective and describe it as a "nuisance" in the housing market.
In response to concerns and feedback, the federal government amended the ban in March to allow non-residents with a valid work permit for at least six months to purchase property. Additional changes included the waiver of restrictions on lands zoned for residential or mixed-use projects and loosening restrictions on the foreign ownership of commercial developers. Despite these adjustments, some in the real estate industry maintain that the ban has had minimal impact on the housing market, attributing it to the various exceptions and loopholes within the policy.
Read the full article on: Global NEWS
