A federal ban on foreign homeownership that was set to expire at the end of 2025 has been extended by two years.
The Department of Finance announced the extension on Sunday. The ban will now be in effect until 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,” Deputy Prime Minister and Finance Minister Chrystia Freeland said in a press release. “The government is intent on using all possible tools to make housing more affordable for Canadians across the country.”
The feds first floated the ban in 2022, and it formally went into effect on January 1, 2023. It bars all non-Canadians — including foreign nationals, as well as foreign commercial enterprises — from buying residential real estate in Canada. There are some exceptions for international students, temporary residents, and refugees.
Reactions to the ban have been mixed, and there were calls from real estate industry stakeholders to tweak the legislation almost immediately after it went into effect. As a result, a number of amendments to the ban went into effect in March. Per those amendments, the foreign control threshold was raised from 3% to 10%, and an exemption was introduced for purchases that could lead to residential development. As well, the feds said in March that the ban no longer applies to vacant land, and no longer applies to work permit holders.
News that the feds are opting to extend the foreign buying ban comes just days before Toronto City Council votes on a new municipal speculation tax, which is also designed to clamp down on foreign home buyers. Toronto's Executive Committee voted in favour of the proposed Municipal Non-Resident Speculation Tax (MNRST) last week, and the item is set to go to Council on Tuesday.
If approved, the MNRST was expected to bring in between $14M and $15M in revenue for the City of Toronto in 2025 alone, according to a report prepared by Chief Financial Officer and Treasurer Stephen Conforti. However, Conforti also noted that that revenue projection was contingent on the federal government lifting its two-year foreign buyer ban. Now that the feds have opted to extend, the projected revenue from the MNRST has dropped down to $9.6M.
