New Rules For Foreign Home Buyers In Canada Now In Force: Here's What You Need To Know

• Published date: 10 April 2023
• Subject Matter: Finance and Banking, Corporate/Commercial Law, Real Estate and Construction, Charges, Mortgages, Indemnities, M&A/Private Equity, Commodities/Derivatives/Stock Exchanges, Contracts and Commercial Law, Real Estate, Landlord & Tenant - Leases
• Law Firm: Bennett Jones LLP
• Author: Mark V. Lewis, Alixe Cameron, Jane Helmstadter, Kiera Stel and Kyle Laplante (Articling Student)

Note: This blog has been updated as of March 27, 2023, following the registration of the Regulations Amending the Prohibition on the Purchase of Residential Property by Non-Canadians Regulations (the Amending Regulation).

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 came into force on January 1, 2023, along with the Act.

The Regulation addresses certain aspects of how the Act operates and clarifies several of the outstanding issues identified in our previous 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. The Amending Regulation modified the Regulation three months after the Act came into force, changing several key aspects of the Regulation and we have explained these changes below.

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 available 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 Amending Regulation repealed the inclusion of land in a census agglomeration or census metropolitan area that is zoned for residential or mixed use from its definition of "residential property". As a result, the purchase of a property is not prohibited if the property is zoned for mixed commercial and residential purposes, is used solely for commercial purposes and does not contain a dwelling unit. This change in the Amending Regulation addresses one of the most problematic aspects of the Act and the Regulation as originally passed and implemented.

2. Exempt and Included Purchases

Definition of "Purchase"

The operative restriction in section 4(1) of the Act prohibits the "purchase, directly or indirectly, [of] any residential property" [emphasis added]. Section 4(1) of the Regulation adds that the "acquisition, with or without conditions, of a legal or equitable interest or a real right in a residential property constitutes a...