The federal government has extended a controversial ban on foreign homebuyers to Jan. 1, 2027.
The policy, which first came into effect last year, was set to expire at the beginning of 2025.
Under the ban, foreign commercial enterprises and people who are not Canadian citizens or permanent residents are prohibited from purchasing residential properties, including detached and semi-detached homes, row houses, townhouses and condominium units.
The government claims foreign ownership of Canadian properties has contributed to this country’s housing affordability crisis, particularly in major cities.
The Canadian Real Estate Association says the ban and any extension thereof is baseless and unnecessary, given there is no analysis, evidence or data from Statistics Canada, Canada Mortgage and Housing Corporation or the Department of Finance to support its intended impact.
There are also exemptions to the ban that dissenters say water down its effectiveness. The prohibition does not apply to temporary residents who are working toward permanent residency, refugee claimants, international students and non-residents who are married to or in a common law relationship with a Canadian citizen.
Recreational properties, such as cottages or lake houses, and homes in municipalities with a population of less than 10,000 are also not subject to the ban.
Those who contravene the Prohibition on the Purchase of Residential Property by Non-Canadians Act, or any person that knowingly assists a non-Canadian in contravening it, can be fined up to $10,000. In addition, a court may order the sale of the property purchased.
Earlier this year, Toronto Mayor Olivia Chow’s executive committee endorsed a proposed 10% tax on foreign buyers of residential properties, which, if approved by city council, would have come into effect Jan. 1, 2025.
Ontario introduced a 25% Non-Resident Speculation Tax for residential properties in 2017. City staff has recommended that Toronto’s new tax mirror the province’s.