As of Jan. 1, 2023, foreign investors will be banned by the Canadian government from purchasing non-recreational residential property.
“Homes should not be commodities. Homes are meant to be lived in, a place where families can lay down roots, create memories, and build a life together,” said Hussen.
CMHC spokesperson Brittany-Anne Hendrych told The Epoch Times: “We know that the lack of housing supply is driving housing affordability challenges in Canada, and speculative investments in real estate are exacerbating the problem by pushing housing prices out of reach for too many Canadians.”
“The data is clear: there is a lack of adequate supply of housing in Canada, and this is driving up housing prices. Speculative foreign investments add even more demand pressure on the Canadian housing market, further driving up the cost of the limited supply of housing.”
Foreign Buyers
Over the past decade, money from mainland China has flooded Vancouver, Andy Yan, an urban studies adjunct professor at Simon Fraser University in Vancouver, said in 2019.Yan said that foreign buyers were purchasing in Vancouver out of “the desire for safe haven ... looking for a hedge against political, economic, social insecurity.”
According to the professor, for more than a decade wealthy Chinese buyers spent millions purchasing houses, condos, and apartment blocks throughout the greater Vancouver area, driving up prices and reducing the city’s housing availability.
Yan analyzed purchases and found that buyers with “non-Anglicized Chinese names” had bought two-thirds of 172 houses sold in a six-month period beginning in September 2014 in Vancouver’s most expensive west-side neighbourhoods.
Students
In 2016, a report in the Huffington Post quoted B.C.’s then-NDP-housing-critic David Eby, now premier of the province, as saying individuals identifying their occupation as students spent $57.1 million on housing in Point Grey, one of Vancouver’s most pricey neighbourhoods.Of the purchases, $40 million worth were supported by mortgages from three Canadian banks: the Bank of Montreal (BMO), CIBC, or HSBC, Eby said at the time.
“The main issue here today, in my mind, is that when you have students buying tens of millions of dollars worth of property and flipping homes, that should be a red flag,” he said.
Non-Resident Owners
In March 2019, the Canadian Mortgage and Housing Corporation (CMHC) published statistics on foreign ownership in housing markets in select provinces.In B.C., 6.2 percent of properties had at least one non-resident owner, with Vancouver higher at 7.6 percent. In Ontario, 3.3 percent of properties had one non-resident owner, with Toronto at 3.8 percent. In Nova Scotia, 6.2 percent of all properties were owned by a non-resident, with Halifax at 4.3 percent.
The proportion of non-resident ownership is highest for condominium apartments.
In Vancouver, at least 11.2 percent of condominiums are owned by one non-Canadian resident. In Toronto, non-residents own 7.6 percent of the entire number of condos in the metropolitan areas.
B.C. in 2015, and Ontario in 2016, began taxing homes bought by non-residents. Ontario began taxing 15 percent of the sale price, and increased that in 2022 to 25 percent.
Exemptions
The legislation does contain exemptions that allow foreign workers, and international students who plan to reside in Canada long term, to purchase homes. The exemptions were announced on Dec. 21, leaving prospective purchasers just 11 days to complete any sales that could be prohibited by Jan. 1, 2023.International students can spend a maximum of $500,000 on a property and must have spent most of the last five years in the country. Workers must have worked and filed tax returns in Canada for at least three out of the previous four years. Diplomats, consulate staff, foreign nationals with temporary resident status, and refugees can still purchase residential property.
- a detached house or similar building that contains up to and including three dwelling units, which are in turn defined as a “residential unit that contains private kitchen facilities, a private bath and a private living area”
- part of a building that is intended to be owned and used as a place of residence. This explicitly includes but is not limited to portions of semi-detached homes, rowhouse units, and residential condominium units
Criticism
The Act sets a $10,000 fine for non-Canadians purchasing property in violation of the legislation, and a court could order the property to be sold at an amount not more than what was paid for the property, and potentially less.“Under this policy, a foreign national can still purchase a home. If they separate from their spouse, they can buy another home. If their child turns 18 and wants to buy the house across the street, they still can. This does nothing to help put first-time homebuyers first. Why is the so-called ban so full of holes that it is like Swiss cheese?” said Albas.
“At this point the Liberal’s foreign buyer ban appears to target individuals and corporations rather than foreign capital,” said John Pasalis, president of Realosophy Realty Inc. Brokerage, a residential realty brokerage company in Toronto. His comments were made in a Dec. 20 article published in the company’s Move Smartly monthly report.
Pasalis said, “Ensuring the parents of university students can speculate in Canada’s housing market (in their child’s name) appears to be one of the key selling points our governments are promoting when encouraging international students to study in Canada.”
“The Liberal’s foreign buyer ban is an exercise in political theatre and will likely have very little impact on the housing market,” said Pasalis.