In a bid to combat the persistent housing supply and affordability challenges gripping Canada, the federal government recently announced an extension of the Prohibition on the Purchase of Residential Property by Non-Canadians Act, commonly known as the foreign buyer ban. Originally set to lapse on January 1st, 2025, the Act will now remain in force until January 1st, 2027.
The rationale behind the extension, according to the Liberal government, is to continue efforts to temper the country’s red-hot housing market and enhance accessibility to homeownership for Canadian citizens. The ban, which restricts foreign commercial entities and individuals who are neither Canadian citizens nor permanent residents from acquiring residential properties in Canada, is viewed as a key component of a broader strategy aimed at addressing housing affordability concerns.
Despite these intentions, the real estate industry remains skeptical about the ban’s efficacy in significantly ameliorating housing affordability. Royal LePage, a prominent real estate services provider, asserts that extending the foreign buyer ban is unlikely to yield substantial improvements in housing accessibility for Canadians.
Karen Yolevski, COO of Royal LePage Real Estate Services Ltd., commented, “We do not foresee an extension to the foreign buyer ban resulting in a drastic improvement to housing affordability. Non-Canadian property ownership makes up a small percentage of the overall housing market, therefore a ban on such ownership is not likely to improve access to housing in a material way. Given the imbalance between available inventory and buyer demand, the best way to solve Canada’s housing crisis is to significantly increase supply.”
The extension of the ban is not without exceptions. Certain individuals, such as those holding temporary work permits, refugee claimants, and international students meeting specified criteria, are exempt from its provisions. Violators of the ban may face penalties of up to $10,000 and could be compelled to divest the affected property.
While the foreign buyer ban represents a proactive measure by the government to address housing affordability concerns, its long-term impact remains uncertain. As stakeholders continue to debate the most effective solutions to Canada’s housing crisis, the imperative of bolstering housing supply emerges as a central focus for policymakers and industry players alike.