The federal government has amended its Prohibition on the Purchase of Residential Property by Non-Canadians Act, a two-year ban on foreign buyers that came into force on January 1 of this year.
This follows intense criticism from the residential and commercial real estate sectors, which pointed out that the ban would stunt residential development and threaten commercial real estate financing. Critics claimed the Act was rushed into law with a lack of foresight or industry consultation.
The March 27 amendments, effective immediately, include the following, according to the Minister of Housing and Diversity and Inclusion:
Vacant land exempt
Section 3(2) of the regulations is amended, so the prohibition does not apply to lands zoned for residential and mixed use. Vacant land zoned for residential and mixed use can now be purchased by non-Canadians and used for any purpose by the purchaser, including residential development.
Residential development allowed
This exception allows non-Canadians to purchase residential property for the purpose of development. The amendments also extend the exception currently applicable to publicly traded corporations under the Act, to publicly traded entities formed under the laws of Canada or a province and controlled by a non-Canadian. This would include real estate investment trusts.
Increasing foreign ownership
The threshold of foreign ownership of a Canadian private corporation exempt from the ban has been increased from 3 per cent to 10 per cent. This aligns with the definition of “specified Canadian corporation” in the Underused Housing Tax Act.
Work permit holders can buy a home
This amendment will allow those who hold a work permit or are authorized to work in Canada under the immigration and refugee regulations to purchase residential property. Work permit holders are eligible if they have 183 days or more of validity remaining on their work permit or work authorization at time of purchase, and they have not purchased more than one residential property. The current provisions on tax filings and previous work experience in Canada are being repealed.
