Buying Property in Canada as a Foreign National

We are often asked by clients and potential clients about the possibility of purchasing a vacation home or retirement home here – which makes sense when you consider our offices are located in southern Alberta, near the spectacular Canadian Rockies.  We love it here too!

The rules regarding foreign property ownership were changed recently by the federal government, as of January 1st, 2023.  The new rules create restrictions on the ability of non-Canadians to buy homes in Canada. 

I’ll take this opportunity to summarize the new restrictions applicable to foreign nationals. These rules are in effect for two years, until January 1, 2025 and will be automatically cancelled after that. They are part of the strategy of the Canadian government to increase the overall housing supply for Canadian citizens and permanent residents who are facing severe housing shortages and affordability challenges right now. 

The general rule: non-Canadians may not purchase residential property

The general concept is that non-Canadians are prohibited from purchasing residential property within the urban areas of Canada.

BUT there are a great many exceptions. So if you are hoping to buy a house as a foreign national, the key is to assess whether you fit within any of the exceptions. The devil is definitely in the details here! The exceptions are numerous, and precise. We have summarized the main ones in this article to flag possible areas of concern. But you will need to dig much deeper if you are considering such a purchase to establish with certainty that you are clearly eligible. The responsibility rests solely on the purchaser to ensure this, and the penalties for non-compliance can be severe. 

When does the general rule apply?

The prohibition applies to non-Canadians purchasing residential property in urban areas of Canada. Before we identify the main exceptions, let’s clarify how these terms are used in the law, called the Prohibition on the Purchase of Residential Property by Non-Canadians Act. 

If you fit within these four concepts, this law applies to you:

A. 
Non-Canadian – Refers to those who are not Canadian citizens or permanent residents of Canada. Therefore, a visitor, foreign worker or international student are all considered non-Canadians when it comes to buying residential property in Canada, even if they are already living here with temporary status. 
Non-Canadians also include foreign investors or a foreign commercial enterprise, as well as a Canadian company controlled by a non-Canadian.

B.   
Purchasing – Buying residential property directly or indirectly is prohibited for foreign nationals.But thelaw does not apply if the foreign national, rather than purchasing the property, acquires it by another means, such as through an estate or divorce settlement.

C.   Residential property – The restrictions impact residential propertiesonly.This is defined to include a detached home, semi-detached houses such as a townhouse, a group of up to three dwelling units, a condominium, rowhouses or a similar residential complex that contains less than 4 dwelling units. It does not matter if it is a rental property. Anything outside the definition of “residential property” is not covered by this law. More specifically, foreign nationals are not precluded from buying vacant land, recreational properties such as a cottage or vacation home, business or commercial properties such as an office tower, or large residential complexes with four or more dwelling units such as an apartment building. There is also a development exemption – the law does not apply to or residential property that is purchased for development purposes (above normal repairs). 

D. 
Urban areas – The restrictions apply to homes in cities with over 100,000 population as well as communities with over 10,000 population using

census data from Statistics Canada. The law does not apply in a smaller population centre or rural areas.  To figure out whether a specific residential property is included in a region covered by the law, there is a tool for this purpose on the CMHA (Canada Mortgage and Housing) website: https://www.cmhc-schl.gc.ca/professionals/housing-markets-data-and-research/housing-research/consultations/prohibition-purchase-residential-property-non-canadians-act

Exceptions

Despite the general rule above, the law will not apply to a foreign national who is: 

• the spouse or common-law partner of a Canadian citizen or permanent resident purchasing a residential property with their partner
• temporary residents who were granted status through fleeing a crisis, including Ukrainian nationals who came to Canada under the CUAET program
• a refugee claimant
• a diplomat, consular staff or member of an international organization living in Canada



In addition, there are exceptions for foreign workers and foreign students. These temporary residents may purchase a house in an urban area if they meet the conditions applicable to their category below.

Exceptions for foreign workers

A foreign worker may purchase residential property if they:

• hold a valid work permit, or other work authorization
• are currently working in Canada
• have at least 183 days of validity remaining on their work permit at the time of purchase
• demonstrate their intent to become a PR, and to settle permanently in Canada
• have not purchased another residential property since the prohibition started

Exceptions for international students

A foreign student may buy a residential property if they: 

• hold a valid study permit
• have been in Canada for at least 5 calendar years
• were physically present in Canada for at least 244 days in each of the five calendar years preceding the year of the purchase
• filed all required income tax returns under the Income Tax Act for each of the five taxation years preceding the year of the purchase
• are currently enrolled in a program of authorized study at a designated learning institution
• demonstrate the intention to become a PR, and to settle permanently in Canada
• have not purchased another residential property during the prohibition period, and
• the purchase price does not exceed $500,000.

It is apparent from these conditions that most international students will not qualify to purchase a residential property. Few students have been in Canada for 5 years and still hold a study permit. Plus, most students are studying in Ontario and BC where the average purchase price of a home in urban areas is well over $500,000. 

Does buying property in Canada help your immigration chances? 

No. The immigration programs do not give preference to those who have purchased residential property. Plus, in the current environment in Canada, it is clear the government is trying to discourage non-Canadian buyers from entering the housing market, so we recommend people wait until they become permanent residents. We can definitely help you with that!

A consultation with a licensed immigration consultant can help you understand the best pathway to Permanent Residence, as well as how you could become a worker or student in Canada. Once you know your immigration situation, you will be well positioned to discuss if you are eligible to purchase a residential property with a licensed realtor.