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Monday, June 17, 2024

Canada extends ban on home purchases by foreigners to 2026

Canada has lengthened a ban on foreign homebuyers for two additional years as the real estate market begins to show signs of a rebound, stoking concerns about the cost of shelter in cities like Toronto and Vancouver.

Prime Minister Justin Trudeau’s government acted to prohibit non-Canadians from buying residential real estate in 2022, with the measure to expire on January 1, 2025. That date has now been moved to January 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,” Finance Minister Chrystia Freeland said in a statement on Sunday, adding that the government is concerned about residents being priced out of their local housing markets.

The government has carved out exemptions for non-Canadians buying vacant land or residential property for development.

There are also exemptions for foreign students and people on work permits, provided they have been in the country for an extended period and have not already purchased property.

Activity in the housing market has begun to heat up recently as it becomes clearer that the Bank of Canada may be in a position to cut interest rates later this year.

The national benchmark home price in December was C$730,400 (US$542,500), an increase of 36 percent in five years. It’s C$1.2 million in Greater Vancouver and C$1.1 million in Greater Toronto.

Multiple levels of government in Canada have adopted measures aimed at cooling housing costs.

This week, the Toronto City Council will consider a motion to tax the home purchases of non-residents at a rate of 10 percent of the property value. That’s in addition to the 25 percent “non-resident speculation tax” imposed by the province of Ontario.

The motion to be considered on February 6 is intended to “maintain a level of affordability in the residential real estate market by discouraging international buyers from purchasing property in the City of Toronto, particularly those buyers who do not intend to live in the property,” according to a recommendation by the city’s executive committee.

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