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The federal government extends the ban on foreign purchases of Canadian homes until 2027

The federal government extends the ban on foreign purchases of Canadian homes until 2027

By Mounira Magdy

Published: February 5, 2024

Federal Finance Minister Chrystia Freeland said on Sunday "that foreign nationals and companies will be banned from buying residential real estate in Canada for an additional two years, the latest measure in a series of steps aimed at addressing housing affordability concerns that have occupied the ruling Liberals for several months."

Freeland announced the extension in a statement, saying "Canada is extending the ban on purchasing homes by foreigners until 2027, and under the ban, which came into effect last year and was set to expire at the beginning of 2025, foreign commercial companies and individuals who are not Canadian citizens or permanent residents are prohibited from buying residential properties in Canada."

There are some exceptions, including for those who have temporary work permits, refugee claims, and international students who meet certain criteria.

Non-Canadians who violate the ban will be fined up to $10,000 and ordered to sell the property.

Freeland said in the statement, "By expanding the foreign buyer ban, we will ensure that homes are used as homes for Canadian families to live in and do not become a speculative financial asset class."

Adding, "The government is determined to use every possible tool to make housing more affordable for Canadians across the country."

The federal government said it wants to extend the program for another two years because it knows that the housing challenge in Canada will not be solved by the end of 2024, and they want to see how the market changes. Freeland's office said much of the data related to this ban remains preliminary, even from the private sector, because it has only been in place for one year.

Data from Canada Statistics from 2020, the last available year, showed that seven percent of British Columbia's housing supply was owned by non-residents for investment purposes. The figure was 5.6 percent in Ontario, and investment properties were concentrated in downtown Vancouver and Toronto, the data showed.

Tom Davidoff, an associate professor at the Sauder School of Business at the University of British Columbia, wondered if this move would have a significant impact on housing affordability.

While he saw no urgent need to repeal this measure, he said that a combination of vacant home taxes and regional foreign buyer taxes have deflated the foreign buying phenomenon.

Davidoff said in a phone interview, "How much juice is left in this lemon to be squeezed? Since foreign buying has been squeezed out in British Columbia and Ontario through these taxes, that left less affected markets."

But the government argues that the ban is not intended as a magic solution to a complex problem, rather positioning it as one tool in a broad toolbox it uses to tackle housing challenges in Canada.

It says the foreign home ban works in tandem with other recently announced measures to increase the number of homes available to Canadians. This includes removing the goods and services tax on new rentals built for this purpose and delivering billions to municipalities for housing.

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