Government Extends Ban On Foreign Buying Of Canadian Housing

Government Extends Ban On Foreign Buying Of Canadian Housing

Finance Minister Chrystia Freeland declared on Sunday that the Canadian government will be prolonging its prohibition on foreign home purchasing. Initially introduced in 2022, this regulation will now be upheld until the start of 2027. The policy restricts foreign nationals and commercial entities from acquiring residential properties in Canada, although certain exemptions exist for specific groups such as international students, refugee claimants, and temporary workers.

Freeland emphasized the objective behind extending the foreign buyer ban, aiming to ensure that houses serve as dwellings for Canadian families rather than being treated as speculative financial assets. Despite this, some analysts have raised doubts regarding the ban's efficacy in enhancing housing affordability, noting the relatively minimal presence of non-Canadian owners in the housing market. For instance, in 2020, the proportion of the market owned by non-residents in certain provinces ranged from two to six percent. Similarly, in British Columbia in 2021, only about 1.1 percent of home sales involved foreign buyers.

Furthermore, there are additional exemptions to the home purchasing regulations, allowing for the acquisition of properties with four or more units or in less densely populated areas. Brendan Ogmundson, the chief economist for the B.C. Real Estate Association, suggested that the foreign buyer ban was driven more by political motives than by economic or housing policy.

Notably, some provinces in Canada already had foreign homebuyer taxes in place, while Toronto recently proposed a local tax on non-Canadian residential purchases. Housing affordability has emerged as a significant political issue, with the Canada Mortgage and Housing Corp. (CMHC) highlighting the need for constructing 3.5 million extra homes by 2030 to address the affordability challenge.

Conservative Leader Pierre Poilievre has criticized the governing Liberals for their handling of the housing crisis, proposing various measures to stimulate housing starts, such as offering incentives to municipalities that meet ambitious housing targets and penalizing those that fail to do so. In response, the federal government has engaged in negotiations with major cities to link federal funding from the Housing Accelerator Fund to zoning reforms and other policies supporting construction at the local level.

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