The Prohibition on the Purchase of Residential Property by Non-Canadians Act will come into force on January 1, 2023, as one of several measures enacted by the federal government to target soaring housing prices, increase supply and curb foreign investor speculation.
With few exceptions, the Act will impose a two-year ban on the purchase of substantially all types of residential property (including, without limitation, pre-construction condominium units and freehold homes, and potentially including vacant land zoned for residential development in certain geographical areas) by individuals who are not Canadian citizens or permanent residents of Canada. The ban will also apply to corporations that are not incorporated in Canada or controlled by Canadian citizens or permanent residents of Canada within the meaning of the Act’s Regulations (collectively, non-Canadians).
The Act does not apply to non-Canadians who enter into or assume liability under agreements of purchase and sale prior to January 1, 2023, and impending purchases of qualifying residential property will, therefore, not likely be impacted by the Act. However, agreements of purchase and sale and assumptions of existing agreements of purchase and sale entered into by a non-Canadian on or after January 1, 2023, will remain valid and the transaction can be completed.
Liability for contravention of the provisions of the Act carries a maximum fine of $10,000 and extends to not only non-Canadian buyers, but also those who actually or attempt to “counsel, induce, aid or abet” a non-Canadian to purchase qualifying property, whether directly or by way of assumption of an existing agreement of purchase and sale, knowing that the non-Canadian is prohibited from doing so.
As the Regulations referenced within the Act have not yet been passed, and those Regulations are expected to contain several clarificatory provisions regarding the operation, applicability and prohibitions imposed by the Act, home buyers, builders and brokers are encouraged to watch for additional information regarding the status of the Act and its Regulations to ensure compliance with the legislation once it comes into force.
To learn more about the act and its impacts on residential real estate builders, buyers and brokers, click here for the full article by Aaron English, Seth Zuk and Anthony D’Angelo of Ally Law member firm Torkin Manes.