Less than 3 months after coming into force, the Federal Government has announced broad amendments to the Prohibition on the Purchase of Residential Property by Non-Canadians Regulations, SOR/2022-250.

The Act was passed by parliament on June 23, 2022, with the Regulations being registered on December 12, 2022, and both came into force on January 1, 2023. For an overview of the Act, please see our previous post. Since being passed by parliament, the Act has been criticized for being overly restrictive and failing to meet its purpose of stabilizing the Canadian real estate market.

On March 27, 2023, the Minister of Housing and Diversity and Inclusion announced that the Government of Canada was amending the Regulations to expand the exceptions of the Act to permit more non-Canadians to purchase residential property in certain circumstances.

The amendments, which come into force as of March 27, 2023, are as follows:

Greater Flexibility for Work Permit Holders to Purchase Property

Work permit holders authorized to work in Canada under the Immigration and Refugee Protection Regulations, are now permitted to purchase residential property if they have 183 days or more of validity remaining on their work permit and if they have not purchased more than one residential property. The current provisions and exceptions for work permit holders related to tax filings and work experience are being repealed.

Prohibition No Longer Applies to Vacant Land

Section 3(2) of the Regulations is repealed. The prohibition no longer applies to vacant land zoned for residential or mixed-use; therefore, permitting non-Canadians to purchase vacant land zoned for residential use and to use that land for residential development.

Increase Corporation Foreign Control Threshold

The definition of ‘control’ is being amended to increase the threshold for ownership in corporations and entities formed under the laws of Canada or a province and controlled by a non-Canadian from 3% to 10%. The amendment brings the definition of ‘control’ in line with the definition of ‘specified Canadian Corporation’ in the Underused Housing Tax Act.

Development Exception

The Regulations have been amended to permit an exception for non-Canadians to purchase residential property for the purpose of development. The amendments also extend the exception currently applicable to publicly traded corporations under the Act, to publicly traded entities formed under the laws of Canada or a province and controlled by a non-Canadian.

The amendments to the Regulations are intended to increase the flexibility for newcomers to Canada by permitting the purchase or development of residential property for non-Canadians in the prescribed circumstances. As mentioned in our previous post, the Act and Regulations are set to be fully repealed on December 31, 2025.

About the Author:

Compiled by Student at Law, Dustin J. Doroshenko with input from the McKercher LLP Residential Real Estate Practice Group.

About McKercher LLP:

McKercher LLP is one of Saskatchewan's largest, most established law firms, with offices in Saskatoon and Regina. Our deep roots and client-first philosophy have helped our firm to rank in the top 5 in Saskatchewan by Canadian Lawyer magazine (2021/22). Integrity, experience, and capacity provide innovative solutions for our clients' diverse legal issues and complex business transactions.

This post is for information purposes only and should not be taken as legal opinions on any specific facts or circumstances. Counsel should be consulted concerning your own situation and any specific legal questions you may have.