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The new ban on foreign homebuyers in Canada begins January 1st. see how it works

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A two-year federal ban to prevent non-Canadian individuals and corporations from purchasing residential property goes into effect January 1. It’s a measure that should help make housing more affordable for those who live in this country.

The legislation comes with a number of exceptions, including international students and refugees. But some critics say it still goes too far.

Here’s what you need to know about how it works:

Timeline

The “Prohibition of Residential Real Estate Purchases by Non-Canadians Act” prevents “non-Canadians” and non-Canadians-controlled corporations from acquiring residential real estate. “Non-Canadian” means someone who is not a Canadian citizen, permanent resident or person registered as an Indian under Indian Law. But there are a lot of exceptions.

“The ban is a two-year temporary measure that is part of the government’s response to Canadians’ pressing concerns about housing affordability,” reads a statement sent by a spokesperson for the Minister of Housing, Diversity and Inclusion, in response to questions about Aja. “It is also expected to help reduce the flow of foreign money into Canada to buy residential property.”

There are already taxes on foreign homebuyers in Ontario and BC It is difficult to find statistics on foreign home ownership, but in 2017, Statistics Canada estimated that 3.4% of all residential properties in Toronto and 4.8% in Vancouver are owned by non-residents. Those numbers were higher for condominiums: 7.2% in Toronto and 7.9% in Vancouver.

What happens if you break this law

If a non-Canadian buys a home under this new law, they could be fined up to $10,000 and the home could be sold. Does not apply to renters.

What are the exceptions

International students are exempt from this ban if they meet a number of requirements, including purchasing a property under $500,000. Temporary foreign workers, who have worked in Canada for at least three years and meet certain other conditions, as well as refugees and asylum-seekers, are exempt. So are accredited members of foreign missions in Canada.

The regulations do not apply if they conflict with the existing treaty rights of Indigenous Peoples.

Stephen Cryne, president and CEO of the Canadian Employee Relocation Council, said the three-year restriction is “contrary to the government’s overall goals of attracting the best and brightest to our country.” Under the new regulations, if someone moves to Canada for work, they won’t be able to buy a place right away. Also, if someone has recently moved to Canada from a different country and already has a home, they won’t be able to buy a new one if they need to move to another city, he noted.

His group is also concerned that relocation companies, which sometimes buy employees’ homes if they need to move quickly, will not be able to buy homes under this new regulation, as most are not Canadian-owned.

Likewise, US or multinational companies will not be able to buy employees’ homes so that they can move.

“It’s tying down a lot of these companies, at a time when we need to move people across the country,” he said.

Michael Bourque, executive director of the Canadian Real Estate Association (CREA), noted that permanent residents do not have this status immediately upon arrival in the country.

“Considering we are in a global competition for talent,” for everyone from artificial intelligence experts to carpenters, saying you can come but not buy a house sends “a terrible message,” he said.

What is residential property?

It is defined as buildings with up to three units and parts of buildings such as townhouses and condominiums. The law does not apply to larger buildings with multiple units.

Where does it apply?

The law only applies to residential properties in the Metropolitan Census Area or Census Clusters, which is where the majority of Canadians live. If in doubt, the federal government has provided a map showing where the law applies and where it does not.

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