Canada bans most foreigners from buying homes

Canada bans most foreigners from buying homes.

In an effort to provide additional housing options for locals experiencing a housing shortage, a prohibition on foreigners purchasing residential property in Canada went into effect on Sunday. The statute contains a number of exclusions that let non-citizens, such as refugees and legal permanent residents, to purchase property.

Canada bans most foreigners from buying homes

Ottawa further clarified that the prohibition would only apply to city residences and not to recreational assets like summer cottages in late December.

When home ownership remained out of reach for many Canadians due to skyrocketing prices in the 2021 election campaign, Prime Minister Justin Trudeau offered the interim two-year stopgap.

“The desirability of Canadian homes is attracting profiteers, wealthy corporations, and foreign investors,” his Liberal Party said in its election plank at the time.

“This is leading to a real problem of underused and vacant housing, rampant speculation, and skyrocketing prices. Homes are for people, not investors.” Following their 2021 election victory, the Liberals quietly introduced the Prohibition on the Purchase of Residential Property by Non-Canadians Act.

Taxes on non-residents and vacant residences have also been implemented in major areas like Toronto and Vancouver.

The real estate market in the nation has cooled for sellers despite a recent heyday as mortgage rates have followed the Bank of Canada’s aggressive monetary policy in an effort to contain inflation.

Average home prices have decreased from a peak of more than Can$800,000 (US$590,000) at the beginning of 2022 to just over Can$630,000 (US$465,000) last month, according to the Canadian Real Estate Association.

According to the national statistical office of Canada, less than 5% of Canadians are homeowners, hence many experts have also said that the prohibition on foreign purchasers would not have the desired outcome of making homes more cheap.

Instead, they highlight the necessity for more housing construction to meet demand.

In a report released in June, the government-run housing agency Canada Mortgage and Housing Corporation estimated that by 2030, there will be a need for about 19 million housing units.

In order to meet that demand, it was stated that 5.8 million additional homes must be constructed, which is 3.5 million more than is now planned.