From now until January 2025, a foreign buyers ban is in effect, preventing non-Canadians from purchasing residential real estate in Canada. This prohibition also applies to corporations that are not incorporated in Canada.
Let’s break down why the foreign buyers’ ban exists, who and what types of properties this affects, and what realtors are required to tell you.
Why Does a Foreign Buyers Ban Exist?
The Federal Government passed the foreign buyers ban in response to how much home prices have increased since the pandemic. Several politicians think foreign buyers are largely responsible because they believe they’re purchasing homes and using them as investment properties.
However, economists with the British Columbia Real Estate Association (BCREA) state that foreign investments only account for less than 0.5% of residential real estate purchases. For that reason, we don’t believe that the foreign buyers’ ban will achieve its objective of improving housing affordability.
Regardless, it’s in effect now, and here’s what property it affects and who it impacts:
What Types of Properties Are Affected?
The foreign buyers’ ban applies explicitly to residential properties. These include standalone houses, duplexes and triplexes, semi-detached homes, strata units, and comparable properties.
According to the BCREA, this also includes land that:
- Is zoned for mixed or residential use
- Where there aren’t any habitable dwellings
- Is considered “real property” or “immovable.”
- Is located “within a census agglomeration or a census metropolitan area.”
This ban excludes properties outside a census agglomeration or a census metropolitan area.
Who is Exempt?
Obviously, Canadian citizens and permanent residents are exempt from the ban. Here’s who else is exempt:
- Temporary residents
- International students
- Exempted foreign nationals
- Refugee claimants (based on various conditions)
Multiple aspects of the ban are lacking in clarity. If you’re unsure if this impacts you, you may not be alone. The Canadian Real Estate Association (CREA) is actively working with the Canadian Mortgage and Housing Corporation, legal experts, federal policymakers, and several other stakeholders and organizations to clear up any ambiguities.
What Are the Requirements for Realtors?
Realtors, lawyers, and notaries are responsible for keeping their clients informed. However, they’re not responsible for enforcing the prohibition outlined in the ban. That said, any realtor who knowingly aids a foreign buyer prohibited from purchasing residential real estate between now and 2025 may face charges and a fine of over $10,000.
Realtors aren’t required to report, process, or collect any information regarding foreign buyers. Even so, realtors should err on the side of caution and exercise due diligence.
To help, the CREA has created a certification known as the Certification and Consent of Purchaser. We strongly recommend that realtors get this certification before assisting or advising a potential homebuyer. They should also keep a record of the potential homebuyer’s current and valid identification (e.g., driver’s license or passport) so they have proof of their Canadian citizenship, residency, or exempt status.
New Laws and the Vancouver Housing Market
In addition to the foreign buyer’s ban, the Federal Government recently passed a new anti-flipping rule. It’s clear that the government is trying to slow the spike in housing prices. In 2021, prices in Metro Vancouver increased by 17.3%. Before then, Canadian residential properties experienced a 375% jump from 1996 – 2021.
While the new anti-flipping rule may make an impact, the foreign buyers ban probably won’t, but only time will tell.
Are you unsure whether or not you’re exempt from this ban, or are you looking to find a home for sale? Talk to us about buying a home in Vancouver and owning a piece of one of the most livable and cleanest cities in the world!