Market Update – New Federal Laws for the Purchase of Residential Property

On January 1st, 2023, the Canadian government implemented a new legislation aimed at increasing affordability and making own ownership more attainable for residents.

The act, known as the Prohibition on the Purchase of Residential Property by Non-Canadians, prohibits non-Canadians and corporations controlled by non-Canadians from buying residential properties in the country for a period of 2 years.

Before the regulations were developed, the government solicited feedback from the public. The consultation document, which contained specific policy proposals, was open for comments during a 4-week period in August and September of 2022.

The consultation process received around 200 written submissions from individuals and relevant parties.

Key Points:

  • The Prohibition on the Purchase of Residential Property by Non-Canadians Act prohibits non-Canadians from purchasing residential properties in Canada for 2 years, starting January 1, 2023
  • Residential property is defined as buildings with 3 homes or less, including semi-detached houses and condominium units.
  • The act imposes a fine of $10,000 for any non-Canadian or anyone who knowingly assists a non-Canadian and is found guilty of violating the act. A court may also order the sale of the property if a non-Canadian is found to have violated the law

The law does not apply to:

  • larger buildings with multiple units (more than 3 homes)
  • Permanent Resident’s of Canada
  • Non-Canadians who are looking to rent.
  • Temporary Resident’s studying in Canada (property cannot exceed a price of $500,000)
  • Temporary Resident’s working in Canada
  • Refugee Claimants
  • Non- Canadian Spouses and common-law partners
  • Residential properties outside of a Census Metropolitan Area or Census Agglomerations (Ex – Vernon, Tofino, Big White, Merritt, Golden, Port Hardy, Fernie, Princeton)
  • Canadian-based corporations controlled by a Canadian
  • Those who acquire a residential property because of divorce, separation, gift or death

What does this mean for our market:

  • Keep in mind that according to the StatsCan, non-residents only make up less than 4% of residential property owners in most parts of Canada (4.7% in BC).
  • It has been forecasted that interest rates will start to lower as soon as the 2nd quarter of 2023 and will balance out by 2024.
  • Market inventory is increasing meaning more options for buyers and a great time to build your real estate portfolio!

Learn more from CMHC here.

If you have any questions or would like to discuss with a VIRANI Advisor please let us know, 604.695.1000 or [email protected].

Statistics Canada, Financial Post

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