Existing prohibition on foreign ownership of residential property in much of Canada is likely to be extended through the end of 2026 under a plan announced by the Canadian government.
Finance Minister and Deputy Prime Minister Chrystia Freeland announced on 4 February that the Canadian government intends to extend the existing prohibition on foreign ownership of residential property throughout much of Canada for an additional two years. The move comes as Prime Minister Justin Trudeau and his government work to address growing concerns in Canada about housing affordability. The existing ban, which is currently set to expire on 1 January 2025, will be extended through to 1 January 2027.
In the announcement, Freeland said: “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. The government is intent on using all possible tools to make housing more affordable for Canadians across the country.”
The statement from Freeland comes just over a year after the Prohibition on the Purchase of Residential Property by Non-Canadians Act went into effect. The Canadian Ministry of Housing and Diversity and Inclusion released amendments to the regulations in March 2023, which included easing the requirements that non-Canadian individuals must meet in order to purchase property. Despite these changes, relocation management companies (RMCs) have generally still not been able to acquire residential property from transferees due to restrictions placed on “non-Canadian” companies being able to purchase residential property. To date, the Canadian government has not acted on requests from the talent mobility community to amend the regulations to allow RMCs to support home sales in Canada, and the announcement by Freeland did not note any further updates to the regulations at this point.
The Canadian Employee Relocation Council (CERC) has communicated with the Ministry of Housing and Diversity and Inclusion following Freeland’s announcement reaffirming the ask that employee relocation transactions be exempt from the regulations. The Act would need to be amended to enable the extension through 2027, and this process could provide an opportunity for an exemption to be implemented.
Considerations for Talent Mobility Professionals
Extension of this prohibition without an exemption addressing employee relocation programs will result in continued challenges for companies and suppliers supporting the movement of talent to and from
Canada.Craig Anderson, vice president at AECC and past chair of WERC’s Global Tax Policy Forum, shared the following insights on the Act and the announced intention to extend the duration:
“It was unfortunate that this legislation made it into Prime Minister Trudeau’s 2022 budget. This occurred after a wave of public sentiment that associated foreign ownership with taking away affordable home ownership from Canadians, despite years of warnings from the Canadian Real Estate Association (CREA) about national housing shortages. All political parties seem to agree that protections were needed to make homes available for Canadians, and the inclusion of the Act was quickly passed with little time for public input.
“Relocation and its non-Canadian entities are only desiring to establish valid home sale relocation programs but instead have become unintended victims of this Act despite having no ownership interest in properties for the purposes of personal use, investment, or speculation. Critics of extending the term of the Act point to data from the Canadian Mortgage and Housing Corporation (CMHC) that only 2% of homes purchased in 2021 were made by non-Canadians. Similar results by the chief economist of the British Columbia Real Estate Association and studies on foreign ownership from within academia all fall within the 2-6% range. Hopefully, with support from WERC, CERC, and corporate members, our request for further exemptions that support economic growth with employee mobility will be fruitful and some relief granted.”
WERC, in conjunction with CERC and other industry partners, will continue to engage with the Canadian government on this issue and will provide updates to members as available.
Michael T. Jackson is the vice president of member engagement and public policy at WERC.
Craig Anderson is the vice president of AECC and past chair of WERC’s Global Tax Policy Forum
This article also includes input and insights from leaders of WERC’s Global Tax Policy Forum.