Regulations on the Prohibition on the Purchase of Residential Property by Non-Canadians Act released

On January 1, 2023 the federal government released the supporting regulations on the Prohibition on the Purchase of Residential Property by Non-Canadians Act (Foreign Buyers Ban) which includes definitions, exceptions, and enforcement elements to help individuals understand and comply with the law. FAQ on the regulations is now available on the CMHC website.

What is the Prohibition on the Purchase of Residential Property by Non-Canadians Act?

On June 23, 2022, Parliament passed the Prohibition on the Purchase of Residential Property by Non-Canadians Act. Coming into force Sunday, January 1, 2023, this Act:

• Does not apply to Canadian citizens or permanent residents.

• Applies to Non-Canadians directly or indirectly purchasing residential property in Canada for a period of two years.

• Applies to residential property, including detached houses or similar buildings of one to three dwelling units, as well as parts of buildings such as semi-detached houses, condominium units, or other similar premises.

• Applies to direct or indirect purchases of residential property, including purchases made through corporations, trusts or other legal entities.

• Establishes penalties for non-compliance applicable to Non-Canadians, as well as any person or entity knowingly assisting a Non-Canadian in violating the prohibition.

What are some of the key elements covered in the regulations?

Purchase:

The regulations broadly define the term purchase to include the direct or indirect acquisition of a right or interest in Residential Property. The regulations then specifically exclude, among other things, acquisitions of interests resulting from transitional or life events such as death, divorce, separation, or a gift.

Excluded residential properties:

Properties located outside of a Census Agglomeration (CA) or Census Metropolitan Area (CMA) are excluded from this prohibition. A full map of Canadian CA and CMA is available from Statistics Canada.

Exceptions:

Exceptions to the prohibition are permitted for international students, temporary residents, foreign nationals, and refugee claimants, subject to varying conditions, such as tax filing and residency obligations. For further details, please consult the regulations and/or ensure the buyer who may fall into one of these exception groups seeks legal advice on their eligibility.

Additional guidance:

Further to the information that has been provided in the regulations, Canada Mortgage and Housing Corporation (CMHC) has released additional information and FAQs with respect to the interpretation of the Act and regulations.