comments 2

Non-Canadians can’t buy a lot of real estate

The Prohibition on the Purchase of Residential Property by Non-Canadians Act — which came into effect in January of this year and bans foreigners from buying residential real estate in the country for two years — is weird.

We can debate whether banning foreigners from buying residential real estate is really helpful for housing affordability and if it’s the most impactful place to focus our attention (and we have talked about this many times before), but the part that is particularly odd is this feature here:

…the law’s definition of residential property includes land that is zoned for residential use or mixed use, which covers huge swaths of commercial land across the country. As well, an entity is deemed foreign if a non-Canadian owns a minimum of 3 per cent of the entity.

What this means is that the following scenario is now technically a problem (not actual legal advice!):

  • You own a commercial property with zero homes
  • You have long-term commercial leases in place that also generally preclude you from building new homes in the foreseeable future
  • The zoning of your property allows for residential uses (which you like having in your back pocket)
  • And your cousin from Italy owns 3% of the entity that owns the real estate

This is a scenario where residential homes do not exist and they are unlikely to exist any time soon. It seems clear cut, but I suppose one could argue that it’s exceedingly onerous to try and figure out which sites are soft sites and could actually be developed with new residential. And so if you have the potential to build and then own residential, you should be regulated as if you might ultimately own some of it one day.

But even here, I don’t know why we would want to restrict the supply side of the housing equation. If you’re a developer in Canada where housing is known to be kind of expensive and you want to build more of it for Canadians, isn’t that a good thing? And isn’t it also a good thing if we can get some non-Canadians to help pay for these new homes?


  1. AM

    In typical bureaucratic fashion, these bozos think they can regulate behaviour when they don’t understand all the implications of their law (such as the ones you pointed it).

    More capital to buy and build real estate (regardless of where it’s from) is a good thing for everyone. It’s not foreign owners that make it expensive primarily, it’s the incredible drawn-out and byzantine approvals process, in addition to onerous taxes, levies and DCs.

    What we need is not a ban on capital, but a drastic, dare I say revolutionary change in the regulatory environment to speed up construction and reduce the cost of approvals. We should have a regime that approves 80%+ of permits within a few days, not years.

    Foreign owners are an easy target that can’t really defend itself, so it becomes a convenient lightning rod for all our woes and nothing changes.

    Let’s hope that Tory’s replacement understands this and advocates for change, NIMBYs be damned. I will be a single-issue voter in that election and that issue will be housing.


  2. T-Bone

    Canadian homes should be for Canadians full-stop, no one is saying this is the silver bullet but it is one of the money tools in the toolbox that should have been enacted YEARS ago.


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