By Ketki Saxena
Investing.com – The federal Ministry of Housing has announced a series of amendments to the Prohibition on the Purchase of Residential Property by Non-Canadians (colloquially known as the foreign buyer bank on real estate).
The updated rules now allow non-Canadians to purchase a residential property in certain circumstances.
“These amendments strike the right balance in ensuring that housing is used to house those living in Canada, rather than a speculative investment by foreign investors,” said Hussen, the housing minister in Justin Trudeau’s Liberal federal government.
“These amendments will allow newcomers to put down roots in Canada through home ownership and businesses to create jobs and build homes by adding to the housing supply in Canadian cities.
The foriegn buyer ban initially effect Jan. 1, 2023 and was designed to curtail foreign home ownership in Canada in the context of rapidly declining housing affordability in the country, and persistently low housing supply.
The Act originally prevented non-Canadians from buying residential property for two years, and carries the potential for $10,000 fines for violations.
Here are the four amendments to the ban:
Corporate Foreign Threshold Control Increase
Under the new rules, the corporate foreign control threshold has increased from 3% to 10%. This rule applies to privately held corporations or privately held entities formed under the laws of Canada or a province and controlled by a non-Canadian. Corporations with less than 10% ownership by non-Canadians will now be able to acquire property.
Residential Property for Development
Under the new rules, there is now an exception in place for development purposes, allowing non-Canadians to acquire residential property for development. The exception for development purposes will also extend to publicly traded entities “formed under the laws of Canada or a province and controlled by a non-Canadian.
Vacant Land Allowance
The foreign buyer ban will also no longer apply to vacant land. This means non-Canadians can now purchase vacant land already zoned for residential and mixed use. The updated rules allow the land to be used for any purpose, including to build residential development.
Work Permit Holders Can Purchase Property
Lastly, the amendment to Canada’s foreign buyer ban will allow those holding a work permit in the country to purchase residential property. Permit holders will be eligible if they have at least 183 days of validity remaining on their permit when they acquire the property.