Here’s Why Canada Restricted House Buying By Most Foreigners Until 2025

Do you wish to purchase real estate in Canada? Wait a minute.

Millions of people around the world who are considering relocating choose Canada as one of their top options. Some individuals who are thinking of moving there, though, might need to rearrange their plans. New legislation makes it two years before many foreigners may buy homes in the nation of North America.

Not just in the United States, relocating to Canada has traditionally been a reactionary action when domestic politics turn sour. The “How to relocate to Canada” search exploded in Britain in June 2016, not long after the Brexit vote. But if it gets much more difficult to acquire real estate there, Canada might not want you anymore. The friendly neighbor to the north of America is putting a broad prohibition on non-Canadians buying residential property for two years starting on January 1.

Beginning on January 1, 2023, a new policy in Canada forbids the majority of foreign purchasers from buying homes for investment purposes for two years. This was done to make it more affordable for people to reside in the country.

The Prohibition on the Purchase of Residential Property by Non-Canadians Act does, however, have several exceptions. It makes it possible for foreign nationals who are immigrants or permanent residents to purchase real estate. It also excludes migrants and students from its coverage.

According to The New York Times, the ban only applies to “census metropolitan areas” and “census agglomerations,” which are essentially cities that meet specific demographic requirements. It does not apply to vacation homes in “recreational zones” or other cities. Additionally, foreigners purchasing multifamily properties with more than three units and spouses or partners who are Canadian are exempt from the regulation.

The pandemic’s sharp increase in housing expenses, which in turn had a detrimental effect on inventories, sales, and rentals, prompted the passage of the legislation.

Many politicians in Canada believe that this is the fault of foreign investors who used real estate as an investment.

The housing crisis was a campaign topic for Prime Minister Justin Trudeau, who promised to address it in the 2021 election.

“The desirability of Canadian homes is attracting profiteers, wealthy corporations, and foreign investors,” said the campaign website of Trudeau’s Liberal Party of Canada, according to a report on CNN. “This is leading to a real problem of underused and vacant housing, rampant speculation, and skyrocketing prices. Homes are for people, not investors.”

“Houses should be homes for Canadians to live in and not an investment asset for foreigners,” stated a spokesperson for Canadian Finance Minister Chrystia Freeland.

According to CNN, the trend in home prices has changed in 2022. The Canadian Real Estate Association reports that after reaching a peak of over $800,000 in February, the average price of homes has dropped by 13%.

The current situation is better than it was during the epidemic in 2020 and 2021. The Bank of Canada’s increase in interest rates has resulted in higher mortgage rates.