With less than a month until Canada’s new foreign buyer ban goes into effect, the real estate industry is still waiting for details about the legislation and how it will be implemented.
On Tuesday, Michael Bourque, CEO of the Canadian Real Estate Association, appeared before the standing committee on national finance to speak on housing measures. Bourque used the opportunity to address the contentious legislation.
“…My members have no information about the rules, exemptions, or details of the regulations since they have not been released,” Bourque told the committee. “The onus will be on them to somehow comply…or face a $10,000 fine.”
Beginning next year, non-Canadians will be barred from purchasing residential property in Canada for two years after parliament passed the Prohibition on the Purchase of Residential Property by Non-Canadians Act in June.
CREA CEO, Michael Bourque, makes a statement at the National Finance Senate Committee meeting on Tuesday
CREA has said apart from the steep fine and summary conviction outlined in the act, the association has few details.
“We expect the regulations to be drafted in such a way that the average individual will not be able to comply without expert legal advice,” Bourque said.
The federal government introduced the legislation before Canada’s housing market saw a notable shift in activity. Some industry insiders have told Real Estate Magazine they don’t believe the new ban will move the dial on affordability.
Bourque believes the ban will ultimately make houses less affordable. “Developers count on presales to finance construction, so now they will face a choice of fewer buyers and therefore building fewer units or paying the $10,000 fine as a cost of doing business.”
The CEO added, “Both these choices add to the cost of development and, ultimately, to housing affordability.”
Bourque also warns of the implications the foreign buyer ban could have on Canada’s reputation– adding the country needs immigration to support its labour market.
“We know the benefits of home ownership, and many of the immigrants we attract to our shores share the dream of owning a home and building a community,” he said. “We should make it easier to do so, not harder.
“This xenophobic legislation damages Canada’s brand as a multicultural nation that welcomes people from all around the world,” Bourque said.
The ban comes into effect on Jan. 1, 2023.
Jordana is the editor of Real Estate Magazine. You can reach her by email.
We have gone backwards and we will be faced with serious repercussions , there should be a new motion to change this law.
If the law were to be changed such that International flippers were being penalized it would be a good thing. Make it such that if someone from abroad purchases a home and does not live in it personally and then sells the property, tax them at that point, not up front.
I think Michael Bourque is out of touch with reality. This legislation likely won’t make a big dent in the demand for housing stock given that the immigration agenda of 500,000+ people a year as well as the 1,000,000 plus in the last few years. Isn’t this referenced in the article “Canada a Nation of Renters”? I’m not sure how this ban changes anyone’s view of Canada given that the immigration gates are wide open. Builders will always find a way to build where the demand is, even if it means less profit in the $1,000,000+ category. Secondly this huge influx of people without family doctors has to have contributed to the Healthcare crisis we are living in. Big problem!
Typical Fed Gov legislation created without any foresight in the ramifications this could have. All done in the name of vote buying and the illusion of “doing something” to solve a perceived problem.
This is not the first mess created by this Trudeau Gov in the last while while they tenuously hold onto power while propped up by Singh NDP.
They will likely backtrack after the fact, and then attempt to cover the mistakes by blaming someone else.
This law will put an end to foreigners who come, look at 5 houses and say “i’ll take them all”. Vacancy tax needs to be enforced. Take Whistler BC where the mega mansions sit empty except for 2 weeks a year. Realtors have driven prices through the roof and the $39M mansion will likely be on the market for a long time once the new rules come into play in 2023. Housing is overpriced and out of reach for most so keeping our properties Canadian will hopefully lower the prices.
Realtors do not set prices. Buyers and sellers do
Ditto
I don’t understand how a new tax on Real-estate buyers will help housing to become a less expensive product . The cost of Housing starts with Land servicing plus taxes ,Construction of Building ,plus Taxes on all of this Plus tax on the cost of sales, HST. Legal fees plus taxes..Taxes are funds that are paid to government. Which add to the purchase price.Any in crease in Taxes is just a payment to the Government. . If the the buyer is charged the tax they just add the cost to the next buyer This does not help to lower the cost of housing This will only slow the buying of Homes and increase the pricing in favour of the Government Taxes..Many businesses have their hands in the pockets of people requiring Real Estate as it is one of the staples of life on earth.
I don’t understand how a new tax on Real-estate buyers will help housing to become a less expensive product . The cost of Housing starts with Land servicing plus taxes ,Construction of Building ,plus Taxes on all of this Plus tax on the cost of sales, HST. Legal fees plus taxes..Taxes are funds that are paid to government. Which add to the purchase price.Any in crease in Taxes is just a payment to the Government. . If the the buyer is charged the tax they just add the cost to the next buyer This does not help to lower the cost of housing This will only slow the buying of Homes and increase the pricing in favour of the Government Taxes..Many businesses have their hands in the pockets of people requiring Real Estate as it is one of the staples of life on earth.
Foreign owners buy rental properties. This will most certainly create a shortage. We want people to come to Canada yet we shut the door in their face when they do. I don’t get it. Not even 3% of Real Estate sold in 2020 2021 was purchased by foreign buyers.
Housing prices have already come down. Those poor first time buyers who scrapped together their 20% down are now looking at ZERO equity … they can’t sell or buy anything.
It’s typical senseless government intervention.
We need foreign buyers we don’t need obselete government interference.
Test
The government simultaneously has these ambitious immigration plans and then shuts the door on foreigners looking to purchase a home. They’re being used as a scapegoat for political points. It’s not a good look globally. Most importantly, it ignores that the Fed, with near-zero interest rates, have just handed out gobs of money while allowing Canadians to use their homes as “investments” and “retirement” accounts. They’ve commodified homes and are shocked when the prices go through the roof. Of course, they all know this, but most have benefited from the substantial price swings. Who cares about FTHB or those priced out of the market?
My understanding is that the immigrants coming to Canada have PR status (like I had when I came) which then doesn’t prohibit them from purchasing homes.
Agreed!