The federal government is extending its existing ban on foreign ownership of Canadian housing an additional two years, Finance Minister Chrystia Freeland announced Sunday.
Freeland, who is also deputy prime minister, said in a statement that the extension is one part of the federal government’s economic plan to make housing more affordable for Canadians.
The ban is currently set to expire on Jan. 1 2025, and will be extended to Jan. 1 2027.
“By extending the foreign-buyer ban, we will ensure houses are used as homes for Canadian families to live in and do not become a speculative financial asset class,” Freeland said.
“The government is intent on using all possible tools to make housing more affordable for Canadians across the country.”
The foreign-buyer ban, first instituted on Jan. 1 2023, prohibits buyers who are not Canadian citizens or permanent residents from purchasing property in the country.
The Prohibition on the Purchase of Residential Property by Non-Canadians Act was passed in 2022 as part of an effort to crack down on housing affordability concerns. Foreign money has been buying Canadian residential real estate for years, Freeland’s statement notes, fueling worries about Canadians being priced out of housing markets across the country.
This latest measure to address Canada’s housing crisis comes one month after the Liberal government announced it will be implementing a temporary two-year cap on student permits.
Global News also learned in November that Canada’s ban on non-residents buying property was only expected to affect around two per cent of home purchases each year, according to discussions within the national housing agency ahead of its implementation.
Experts who spoke to Global News say the policy has been ineffective at best and a “nuisance” at worst.
Tom Davidoff, associate professor at the University of British Columbia’s Sauder School of Business, tells Global News that in the B.C. and Toronto markets he studies closely, the share of foreign buyers was likely already suppressed by pre-existing taxes targeting non-resident buyers in those jurisdictions.
“In the most affordability-challenged markets, it’s very hard to believe there was a lot of impact because there were so few foreign buyers to begin with,” he says.
The latest available home ownership data via Statistics Canada shows 2.6 per cent of Toronto’s housing stock and 4.3 per cent of Vancouver’s was owned by non-residents as of 2021. The foreign buyer ban did not institute any measures penalizing existing owners, instead only targetted new purchases as of Jan. 1.
Freeland’s statement Sunday emphasizes that the new measure is just one part of a set of tools to make housing more affordable for Canadian families.
“The federal government is taking bold action and working with all orders of government to build more homes, faster, and put homeownership back within reach for more Canadians,” the statement says.
–with files from Global News’ Craig Lord
