The Amendment Explained: Adjustments to the Non-Canadian Residential Property Ban

March 27, 2023, saw major amendments to the Act, particularly with respect to commercial real estate transactions. This update answers to the confusion many had on whether or not the Act was applicable to land deemed as “residential property” regardless of actual land use (for instance, constructing office buildings or shopping centres), and allows for the continued development of new housing and buildings.

Although foreign buyers are no longer banned from purchasing most commercial real estate properties, it is still prudent for buyers and professionals to review whether or not the purchase is prohibited by the Act, especially purchases concerning farmlands or traditional residential real estate (such as homes, townhouses, and condominiums).

Another key concept to be understood from this update is that non-Canadians are allowed to purchase residential property for the purposes of both residential and commercial development. It is important to note, however, that major repairs, renovations, remodelling of existing residential properties are likely not covered under the “development” umbrella. Non-Canadians are still prohibited from purchasing residential properties solely to rent or lease to tenants.

The specificity of “control” has also been amended from 3% to 10% in terms of the degree of direct or indirect ownership used in the determination of whether a corporation or an entity is considered non-Canadian.

Finally, this update allows for publicly traded Canadian Real Estate Investment Trusts and other non-corporations (for instance, limited partnerships) to participate in the purchase of residential properties, only if they:

• were created under Canadian federal or provincial laws;
• are listed on a designated Canadian stock exchange and are either publicly or privately traded in Canada; and
• must have been physically present in Canada for a minimum of 244 days in each of the five calendar years prior to the year the purchase was made;
• are controlled by less than 10% by a non-Canadian entity.

Work permit holders or individuals authorized to work in Canada under Section 186 of the Immigration and Refugee Protection Regulations:

It was announced on February 4, 2024, that the Act has been extended beyond the original two years, and will continue to be enacted and enforced until January 1, 2027. This extension “is just one part of the federal government’s economic plan to [continue to] make housing more affordable for Canadians.”¹⁰

¹⁰ The Government of Canada. (2024, February 4). Government announces two-year extension to ban on foreign ownership of Canadian housing. https://www.canada.ca/en/department-finance/news/2024/02/government-announces-two-year-extension-to-ban-on-foreign-ownership-of-canadian-housing.html