New Rules For Foreign Home Buyers In Canada Come Into Force January 1, 2023: Heres What You Need To Know

• Published date: 26 December 2022
• Subject Matter: Real Estate and Construction, Real Estate
• Law Firm: Bennett Jones LLP
• Author: Mark V. Lewis, Alixe Cameron, Jane Helmstadter, Kyle Laplante (Articling Student) and Kiera Stel

On December 2, 2022, the Privy Council passed an Order in Council confirming regulations related to the Prohibition on the Purchase of Residential Property by Non-Canadians Act (the Act). The Prohibition on the Purchase of Residential Property by Non-Canadians Regulations (the Regulation) was published on December 21, 2022, in the Canada Gazette. The Regulation will come into force on January 1, 2023, along with the Act.

The Regulation addresses certain aspects of how the Act will operate once in force and clarifies several of the outstanding issues identified in our blog, Canada's Ban on Foreign Home Buyers Soon In Effect: Update and What's Next.

Broadly speaking, the Act prohibits "non-Canadians" from purchasing any residential property directly or indirectly from January 1, 2023, to December 31, 2024. The Regulation provides greater detail on five key elements of the Act.

1. Residential Properties Not in a Census Agglomeration or Census Metropolitan Area Are Exempt

In its 2022 Budget, the federal government signaled its commitment to exempt recreational properties from the prohibition in the Act. The government has followed through on that commitment by applying the Act only to residential properties in either a "census agglomeration" or a "census metropolitan area". Those terms bear the same meanings in the Act as set out in Statistics Canada's Standard Geographical Classification (SGC) 2021, being an area where one or more adjacent municipalities are centered on a population centre, otherwise known as a core.

As now defined, a census agglomeration area requires only a core population of at least 10,000 people based on data from the previous Census of Population Program. In comparison, to be defined as a census metropolitan area, an area must have a total population of at least 100,000 people based on data from the current Census of Population Program, of which at least 50,000 must live in the core based on adjusted data from the previous Census of Population Program. A link to a map of the impacted areas is here.

The effect of this definition is to include not only urban centres such as Vancouver, Calgary, Edmonton, Toronto and Ottawa but also many smaller centres (where many people will own recreational properties) such as Squamish, Chilliwack, Penticton, Ladysmith, Sylvan Lake, Medicine Hat, Canmore, Collingwood, Kawartha Lakes and Wasaga Beach. The Regulation also includes as "residential property" land in either a census agglomeration or census metropolitan area that is zoned for residential use or mixed use, even though there is no habitable dwelling on that land. This inclusion will capture some land that is not generally considered to be "residential" but could be land that is available for future residential development.

2. Exempt and Included Purchases

Definition of "Purchase"

The...