Amendments to the Prohibition on the Purchase of Residential Property by Non-Canadians Act

The Prohibition on the Purchase of Residential Property by Non-Canadians Act, S.C. 2022, c. 10, s. 235 (the “Act”) came into force on January 1, 2023. Subsection 4(1) prohibits non-Canadians from purchasing, directly or indirectly, any residential property situated in Canada. This prohibition is part of an effort by the federal government to address rising housing costs across the country.

The Act also makes it an offence “for any person or entity to counsel, induce, aid, or abet or to attempt counsel, induce, aid, or abet a non-Canadian in a prohibited purchase”. Subsection 6(1) provides that anyone who assists in such a purchase is liable on summary conviction to a fine of not more than $10,000. It is therefore very important to understand if the Act applies to your real estate transaction.

A non-Canadian is defined as “an individual who is not a Canadian citizen, not a person registered as an Indian under the Indian Act, and not a person identified as a permanent resident. Corporations that are incorporated otherwise than under the laws of Canada or a province are considered a non-Canadian for the purposes of the Act. Canadian corporations which are controlled by a non-Canadian are also prohibited from purchasing residential property.

On March 27, 2023, the Government of Canada announced four amendments to the non-Canadian buyer ban, effective immediately. These amendments work to expand the exceptions that are found in the Act, many of which were cited as over-restrictive. The amendments are:

  • When the Act first came into force, an entity such as a real estate investment trust was deemed to be non-Canadian if non-Canadians owned 3% or more of it. This has been increased to 10%.
  • A new exception has been created that allows non-Canadians to purchase residential property for development purposes. It is important to note that “development” does not include “the mere purpose of leasing or renting the property out to tenants or otherwise managing it as a rental property as part of its portfolio”, nor will the exception apply to repairs, renovations, and remodeling.
  • The non-Canadian buyer ban no longer applies to bare land.
  • The ban no longer applies to non-Canadians who hold a work permit or are authorized to work in Canada, so long as they have 183 days of validity, or more, remaining on their permit, and have not purchased more than one residential property.

These amendments show that the non-Canadian buyer’s ban is subject to change, and it is important to understand the Act in its entirety. To learn more about whether the Act applies to your real estate transaction, or if you require any legal assistance with your transaction, contact the Real Estate team at Lakefield Law.

The information in this article does not constitute legal advice. The law may have changed since this article was first published. You should consult with your lawyer to confirm the current state of the law and obtain advice specific to your situation.