Canada is a popular destination for many people who want to live, work, study, or invest in a stable and diverse country. However, buying a home in Canada as an international buyer can be challenging, especially with the new rules that came into effect on January 1, 2023. In this blog post, we will explain what these rules are, who they apply to, and how to navigate the process of buying a home in Canada as an international buyer.
What are the new rules for foreign home buyers in Canada?
The new rules are part of the Prohibition on the Purchase of Residential Property by Non-Canadians Act, which was passed by the federal government in 2022 to address the housing affordability crisis and curb the speculation and inflation caused by foreign investors. The act bans non-Canadians from buying any residential property in Canada for two years, from January 1, 2023 to December 31, 20241. The ban applies to both direct and indirect purchases, meaning that non-Canadians cannot use corporations, trusts, or other entities to buy residential property on their behalf (2).
The act defines a non-Canadian as anyone who is not a Canadian citizen or a permanent resident, as well as any corporation, trust, or other entity that is not controlled by Canadians (1). The act also defines a residential property as any dwelling that has three units or less, such as a house, a condo, or a duplex (1). The ban only applies to residential properties that are located in a census metropolitan area (CMA) or a census agglomeration (CA), which are areas that have a core population of at least 10,000 people according to Statistics Canada (2). This means that non-Canadians can still buy residential properties that are located outside of these areas, such as rural or recreational properties (2)
Who are exempt from the ban?
The act provides some exemptions for certain categories of non-Canadians who can still buy residential property in Canada, subject to some conditions and limitations. These include (2):
Students who meet certain criteria, such as being enrolled in a full-time program at a designated learning institution, having a valid study permit, and having a valid social insurance number. They can buy a property for $500,000 or less, and they must sell it within six months of completing their studies or leaving Canada. Temporary residents who have work permits or work authorizations with 183 days or more left. They can buy only one property, and they must sell it within six months of their work permit or work authorization expiring or leaving Canada. People fleeing an international crisis, such as a war, a natural disaster, or a humanitarian emergency. They must have a valid temporary resident permit, and they must buy a property for $500,000 or less. They can keep the property as long as they have the permit, and they must sell it within six months of the permit expiring or leaving Canada. Non-Canadian spouses or common-law partners of Canadians, provided that they buy the property jointly with their Canadian spouse or partner. They can keep the property as long as they remain married or in a common-law relationship with the Canadian, and they must sell it within six months of the relationship ending or leaving Canada. People buying a residential property with four or more units, such as an apartment building or a townhouse complex. They must use the property for rental purposes only, and they must comply with the reporting and disclosure requirements of the act. People buying vacant land, such as a lot or a parcel. They must use the land for non-residential purposes only, and they must comply with the reporting and disclosure requirements of the act. How to navigate the process of buying a home in Canada as an international buyer?
If you are an international buyer who is interested in buying a home in Canada, and you are not exempt from the ban, you will have to wait until the ban expires or is lifted by the government. However, you can still do some research and preparation in the meantime, such as (3):
Finding a reputable lender who can pre-approve you for a mortgage. This will show you how much you can afford and give you an advantage when you are ready to make an offer. You will need to provide proof of income, assets, liabilities, and credit history, as well as a down payment of at least 20% of the purchase price. Finding a qualified real estate agent who can help you find the right home and guide you through the process. You can search for an agent on REALTOR.ca, where you can filter by location, specialty, designation, and languages spoken. You should look for an agent who has experience in working with international buyers, who understands your needs and preferences, and who communicates well. Researching the market trends and the neighbourhoods that interest you. You can use online tools like Zillow to check the average home prices, inventory, and sales activity in your target area. You can also use Google Maps to explore the surroundings of the homes you are interested in, such as the amenities, the transportation, and the schools. Making a list of the features and amenities that are essential, desirable, and optional for you. This will help you narrow down your choices and prioritize your criteria. You can also use this printable house hunting checklist to rank and compare the homes you visit. If you are an international buyer who is exempt from the ban, you can proceed with buying a home in Canada, but you will have to follow some additional steps, such as (4):
Providing proof of your exemption status, such as your study permit, your work permit, your temporary resident permit, or your marriage certificate. You will also have to sign a declaration that you meet the conditions and limitations of your exemption category. Paying a non-refundable fee of $1,000 to the Canada Mortgage and Housing Corporation (CMHC), which is the agency responsible for administering and enforcing the act. You will have to pay the fee before you complete the purchase of the property, and you will have to provide the receipt to the seller or their agent. Reporting and disclosing your purchase to the CMHC within 30 days of completing the transaction. You will have to provide information such as your name, address, contact details, exemption category, property details, purchase price, and mortgage details. You will also have to report and disclose any changes to your status or your property within 30 days of the change occurring. Selling your property within the specified time frame, depending on your exemption category. You will have to report and disclose your sale to the CMHC within 30 days of completing the transaction. You will also have to pay a penalty of 10% of the purchase price if you fail to sell your property within Learn more:
- realtor.ca
- bennettjones.com
- globalnews.ca
- cbc.ca