Fixes to the temporary foreign homebuyer ban
It wasn't supposed to make it harder to build new housing
After the temporary federal ban on foreign investment in real estate came into effect in January, there were a number of stories about how it was having unintended consequences. The ban was supposed to prevent foreign investors from buying existing homes; the unintended consequence was that it also prevented them from building new homes.
Developers with partial foreign ownership blocked from building housing supply in Canada (Business in Vancouver, February 2023)
Ban on foreign homebuyers hits commercial real estate deals (Globe and Mail, February 2023)
Canada's foreign buyer ban putting housing developments on hold (Yahoo! Finance Canada, March 2023)
From the Globe and Mail story:
The law, which took effect in January, bans foreigners from buying residential real estate for two years. It was designed to help Canadians access more housing by halting competition from outside the country.
But industry and legal experts say the law has inadvertently ensnared commercial property deals involving land, malls, grocery stores and office buildings that do not include any single-family housing.
That is because the law’s definition of residential property includes land that is zoned for residential use or mixed use, which covers huge swaths of commercial land across the country. …
One residential developer, Dorsay Development Corp., has had to put part of its business on hold. For 25 years, it has been constructing condo units and townhouses in the Toronto region. Like other developers, it buys land to build new housing units. But the Canadian-based company is owned by a European investor.
Leona Savoie, Dorsay’s senior vice-president of residential, said she has had to pass on dozens of potential properties. “My investment opportunities have dried up,” said Ms. Savoie, who has analyzed all the sites she has considered and found that the vast majority are zoned for mixed use or residential.
Last week the federal government announced amendments to fix this:
“Vacant land zoned for residential and mixed use can now be purchased by non-Canadians and used for any purpose by the purchaser, including residential development.”
Non-Canadians can purchase residential property for development. Definition of development.
In addition, a work permit holder is now allowed to purchase residential property, and the threshold for foreign control has been increased from 3% to 10%.
More:
Ottawa amends 'illogical' foreign homebuyer ban to help boost housing supply growth (Vancouver Sun)
Canada eases some rules around foreign homebuyers ban (Global News)
Commentary on the amendments from Clark Kassian and Esme Cragg of Dentons
Industry reaction after the regulations were announced in late December 2022. Howard Chai in Storeys.
Reaction from r/canadahousing, which I would describe as populist and angry.