The New Federal Foreign Buyer Ban

There is a federally implemented foreign buyer ban starting January 1, 2023. The ban prohibits non-Canadians from purchasing non-recreational residential property for a period of two years. Non-Canadian is defined as a non-Canadian citizen, corporation, trust or other legal entity. It also includes legal Canadian entities that have more than 3% ownership or voting rights by a non-Canadian. It does not impact permanent residents or Canadian citizens. 

Geographically, the foreign buyers ban only applies to census defined metropolitan areas. Locally this includes all of Greater Vancouver and the Fraser Valley. It does not include Whistler or Pemberton. 

There is a long list of exemptions to the ban which seemingly renders the policy useless in many scenarios. For example, if you are an international student and meet other requirements, you may still qualify to purchase a property under $500,000. Given the complexity of these exemptions, anyone who is not a permanent resident who is still considering buying property in Canada over the next two years should definitely consult with a lawyer to ensure they are eligible for an exemption before doing anything. Please contact me (Nevada Cope) at 604-897-6971 if you’d like assistance with this process.

Some quick context on immigration numbers…in 2021 there were 405,999 new permanent residents. Canada’s immigration plan targets are: 465,000 in 2023, 485,000 in 2024 and another 500,000 in 2025. Once new Canadians get permanent residency, they are not affected by the federal ban. Essentially the real estate market is going to be faced with a wave of new Canadians who can freely buy homes. One can only predict what that will do to prices across major metropolitan areas if those markets don’t ramp up housing starts…

The truth is that foreign buyers do not have a major impact on current housing affordability here in Vancouver. In 2022 only 0.5% of all BC residential sales were by foreign buyers. In years past, BC had a surge of foreign purchasers for several decades from the late 70’s to mid 2000’s. Here’s a great article if you’d like to learn more about some Vancouver specific details. This rapid foreign investment in real estate undoubtedly had some impact on prices but that was years ago and any of those increases have already been well-baked into the market. 

Now what is really impacting affordability is lack of supply, population growth and astronomical development and construction costs. Foreign investment should be the least of our concerns in today’s environment. Our provincial government was way ahead of the feds when they implemented a 15% foreign buyer tax back in 2016 for Metro Vancouver. The tax was further increased to 20% in 2018 and expanded to include other growing areas of BC such as: Nanaimo, Central Okanagan, Fraser Valley and Capital Regional District.

The foreign buyer tax in BC had a significant effect on who was purchasing property. However, it did not have a lasting impact on overall housing affordability. It’s safe to say the tax is the reason foreign purchasing numbers are much lower than 5 years ago. Most people now wait until they get permanent residency to buy their home in Vancouver to avoid paying a punitive property transfer tax. Why the federal government didn’t go with the additional tax model BC tested and tailored to work…is beyond me. It will be interesting to see how the federal ban plays out over the next two years. 

*Written as of December 27, 2022. All information provided is deemed reliable, but is not guaranteed and should be independently verified.*