Prohibition on the Purchase of Residential Property by Non-Canadians Act
The Government of Quebec outlined many housing measures in its last budget. These measures included the introduction of Bill 5, which prohibits the dual agency of a real estate broker. This new law was introduced on June 10, 2022. But it was only a few weeks later, on June 23, 2022, that the bill entitled the Prohibition on the Purchase of Residential Buildings by Non-Canadians Act was introduced this time by the federal government. This latest real estate law will come into force on January 1, 2023 and is already causing many questions. Here is some information that we hope will help you better understand this new legislation and its impact on the real estate community.
Why introduce a Prohibition on the Purchase of Residential Properties by Non-Canadians Act?
This legislation was designed by the federal government to reduce inflation and stabilize the housing market following the pandemic. With the introduction of this law, a more precise framework and regulations on the role of foreign investors will be highlighted. That way, there could be better control over foreign investment and also to facilitate access to properties for Canadians.
What is this new law?
This new law, known as temporary, prohibits non-Canadians (foreigners and non-Canadian businesses) from acquiring residential properties in Canada for two years, until December 31, 2024. Direct or indirect purchases (through corporations, trusts or others) are prohibited.
To whom does the prohibition on the purchase of residential buildings apply?
This prohibition applies to non-Canadians. Canadian citizens are therefore not subject to this prohibition. A non-Canadian is defined as an individual other than a Canadian citizen and also includes any corporation that is not subject to federal and provincial laws.
Who could be exempted from this prohibition on the purchase of residential properties by non-Canadians?
– Canadian citizens
– Permanent residents
– Foreign students who are going to obtain permanent residence
– Persons holding a work permit
– A non-Canadian purchasing a property with their Canadian spouse/common-law partner
– People fleeing an international crisis
What types of residential buildings are covered by this act?
– Individual houses
– Semi-detached houses
– Condominiums (divided and undivided)
– The duplexes
– The triplex
– Other similar properties
These residences are primary residences. Secondary residences could be excluded from this prohibition. Other specifications are to be expected. Vacant land zoned for residential use would also be included in the prohibition.
What happens if a non-Canadian is currently on an offer to purchase?
Since the new legislation will come into force on January 1, 2023, offers to purchase accepted before that date could be exempt. The fulfilment of the conditions of the offer to purchase may be completed after this date.
What are the penalties if the Prohibition on the Purchase of Residential Properties by Non-Canadians Act is not complied with?
Significant penalties may apply if a non-Canadian acquires a residential property in Canada. The same applies to any person who advises and provides assistance to that person. These individuals will be convicted and will face costly fines of up to $10,000.
In the event that a person is convicted, an order to sell the property may also be sought. In this case, the sale price of the illegally purchased property could not exceed the purchase price of the property. Therefore, no monetary benefit could be obtained.
What is the real estate broker’s role in enforcing the prohibition against a non-Canadian purchasing a residential property?
The real estate broker must have a perfect knowledge of this new law and will have the role of transmitting all information about it to his clients (Canadians and non-Canadians). A brokerage practice based on transparency will be all the more necessary.
The real estate broker will also have the role of acting with integrity because, as mentioned above, any assistance given to a non-Canadian regarding the purchase of a residential property may be sanctioned. It is then important for the real estate broker to understand all the particularities of this law in order to always act with honesty and morality.
There are a lot of conversations about the prohibition on the purchase of residential properties by non-Canadians Act. Although a certain amount of information on this law has been revealed, other questions remain. The law will not be enforced until January 1, 2023. The government will still have to clarify the issue of exceptions for the types of residential properties and other specific situations that would not be part of the prohibition. Clarifications will be made in the coming months.
The Prohibition on the Purchase of Residential Real Property by Non-Canadians Act was passed on June 23 and will come into force on January 1, 2023. This new law prohibits non-Canadians from acquiring a residential property in Canada for two years. In addition to Canadian citizens who are not covered by this act, the main people who could be exempted from this prohibition on the purchase of residential properties are permanent residents, those in the process of becoming permanent residents and those with work permits. The residential buildings concerned in this law refer to single and semi-detached houses, condominium dwellings (divided and undivided) and buildings of one to three units (duplex and triplex). The penalties are severe if a non-Canadian purchases a residential property in Canada. It is the same for the person who will help him. Being found guilty and having to pay a fine of up to $10,000 are among the main consequences of this offense. With the arrival of this new law, it is important that real estate brokers are familiar with the specifics of this new change in real estate and pass this information on to their current and potential clients. Integrity and compliance with the law are also important to ensure a transparent brokerage practice.
Questions about this new law? Contact one of our real estate brokers to find out more.
Consult other real estate news
Prohibition on the Purchase of Residential Property by Non-Canadians Act The Government of Quebec outlined many housing measures in its last budget. These measures included
Raise in key interest rate – Key informations In our current context of pandemic and real estate market overheating, the threat of an increase in