As of January 1st, 2023, the Prohibition on the Purchase of Residential Property by Non-Canadians Act, also known as the foreign home ownership ban, was put into effect in Canada, preventing non-Canadians from buying residential property, directly or indirectly, for a period of 2 years. This policy has sparked significant debate, with many Canadians believing the Act runs contrary to key Canadian values including diversity and inclusion, and real estate professionals noting that the lack of foreign investment is actually hurting Canada’s local housing markets and the economy as a whole.
After a few months seeing this new policy in action, experts have begun to notice how the Act may disproportionately affect certain buyers and create greater difficulties for purchasing real estate. For example, the foreign home ownership ban has caused significant implications for professional athletes and senior executives, who are frequently required to relocate for work and wish to purchase property in their new cities. While the federal government introduced amendments to the Act in March which allowed some foreign workers like professional athletes to purchase homes, these prospective buyers are still subject to the 25% Non-Resident Speculation Tax (NRST) that non-Ontarians have to pay on residential properties in the province.
Like most professional sports teams, many athletes on Canada’s famous ice hockey teams, for example, are not actually Canadian citizens. As such, even though some of them are now able to bypass the ban, they are still opting to rent instead of buy due to the tax. Overall, the NRST and foreign buyer ban may have wider consequences on the capacity of the real estate sector to attract foreign investments and Canadians will have to see what long-term consequences these policies have for the market altogether.