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Do You Wish to Buy a House in Canada? Not So Fast.

This summer, after the Supreme Court overturned the landmark 1973 Roe v. Wade decision, Americans flooded into Google and typed ” move to Canada” – the search term increased by 850 percent in a single hour. “How to develop into a Canadian citizen” rose 550 percent.

Moving to Canada had long been a knee-jerk impulse as domestic politics began to sour, and never just within the United States. In the UK, the “How to maneuver to Canada” search was launched in June 2016, shortly after the Brexit referendum.

But Canada may not want you anymore – a minimum of it makes it much harder to purchase property there. Starting January 1, America’s friendly neighbor to the north will implement a sweeping ban on non-Canadians from purchasing residential property for 2 years.

Like so many countries through the pandemic, Canada has seen massive increases in each selling and renting prices as rates of interest have fallen to record lows, taking supplies with them. In the midst of a tumultuous 2021 election campaign, Prime Minister Justin Trudeau’s Liberal Party of Canada attempted to resolve a housing crisis that had became a political crisis. “The appeal of Canadian homes attracts speculators, wealthy corporations and foreign investors,” the campaign said website. “Houses are for people, not for investors.”

After a near-election victory, the party quietly introduced a bill last spring to ban non-Canadian residential property acquisitions, putting foreign homebuyers within the crosshairs.

The proposal was in response to widespread political sentiment, but “sounded ridiculous,” said Jacky Chan, founder and CEO of Vancouver-based BakerWest Real Estate, which sells high-rise high-rises across the country.

“Even though Vancouver and Canada are so multicultural, there’s an opinion around, ‘Yes, Asians, foreigners, immigrants come here, buy properties, eat up stocks and drive up prices,’ said Mr. Chan, who was born in Hong Kong and has lived in Vancouver for 29 years . “Most foreigners who buy real estate are usually not speculators. They are immigrants who buy houses to live in.”

Besides, regional governments were already working to unravel the issue of soaring house prices. In Ontario, the provincial government raised the property speculation tax for foreign buyers from 20 to 25 percent. British Columbia passed a 20 percent tax on international home buyers. The measures appeared to be working, with foreign real estate investment falling from a high of 9 percent of home sales in June 2016 to around 1 percent in June 2022, in response to British Columbia’s Ministry of Finance. “No sane programmer was targeting them,” Chan said. “Why would a ban make sense?”

By mid-2022, prices across Canada had already began to fall. But in June, without fanfare, a ban on foreign traders was signed. In fact, it went largely unnoticed, even by many real estate professionals.

“It was one line within the document,” said Julie Côté, senior manager of the non-resident property taxation practice at Montreal-based accounting firm FL Fuller Landau. “So silence. They never let the world know this was really happening.”

Mr. Trudeau and other politicians have said little concerning the bill because it was passed, and native media has made little mention of it. “Trying to get information from the federal government on this was a hell of a job,” Ms Côté said.

Perhaps since the bill has sparked accusations of xenophobia. As immigration numbers hit record highs in Canada — census data has been released in October revealed that immigrants now make up 23 percent of the population, with the overwhelming majority coming from India and China – some industry veterans say there’s a connection.

Non-Canadians “bear lots of blame for the housing crisis and it has been an enormous political issue,” said Brendon Ogmundson, chief economist on the British Columbia Real Estate Association. “But the pandemic has cut off almost a whole segment of foreign buyers, and costs are still at record highs. This is proof that foreign buyers are usually not significant market drivers and this ban is not going to change anything.”

Michael Bourque, chief executive of the Ottawa-based Canadian Real Estate Association, called the bill “an insult to Canada as a welcoming, multicultural nation.”

“We tell people we don’t need them here,” he said.

In key foreign buyer markets reminiscent of Hong Kong, where immigration to Canada is booming, the law could have little impact on demand, said Alisha Ma, managing partner of Hong Kong-based firm Halcyon Counsel Limited, which helps clients immigrate to Canada. “Customers are willing to attend for everlasting resident status, and since we live in a high-interest-rate environment, there’s much more incentive to attend,” Ms. Ma said.

However, she argued that the brand new policy was aimed directly at “Canada’s domestic vultures” and rejected the view that it was discriminatory. “It’s not against Canada’s friendly immigration policy,” she said. “They’re just slamming the door on real estate investors.”

Federal officials declined to reply questions for this text. Housing Minister Ahmed Hussen didn’t reply to requests for comment. In an emailed statement, Adrienne Vaupshas, ​​a spokeswoman for Deputy Prime Minister and Finance Minister Chrystia Freeland, said the bill was aimed toward a small group of speculators. “This measure prohibits foreign business enterprises and individuals who are usually not Canadian residents or everlasting residents from acquiring non-recreational residential property in Canada,” Ms Vaupshas wrote.

On December 21, six months after the law was passed, the federal government issued a short regulations, including exemptions and enforcement. They clarified that the ban only applies to “census areas” and “census agglomerations” – essentially cities that meet certain population criteria – and never holiday homes in “recreation areas”. Exemptions include buyers with Canadian spouses or partners, refugees and foreign nationals buying multi-family housing with greater than three units (which could theoretically be rented to Canadians).

As for offenders, fines of as much as C$10,000 might be imposed “on any person found guilty of knowingly assisting a non-Canadian person in violation of the prohibition.” And offending buyers might be forced to sell the property “receiving not more than the acquisition price paid”.

For some, the regulations didn’t resolve the nuances of the law. “There are not any meaningful explanations,” said Stephen Cryne, president and CEO of the Canadian Employee Relocation Council, which advises firms on workforce mobility.

Brokers say this ambiguity paralyzed them. Instead of rushing to fulfill the looming deadline, most foreign buyers will simply wait until the law expires in two years. “My clients are in a holding group,” said Liza Kaufman, co-founder of Sotheby’s International Realty Quebec in Montreal. “When they hear that even professionals cannot get clarity on the law, they resolve to sit down through it.”

She said only considered one of her clients, an American retiree who declined to be interviewed, was “in a rush” to purchase a pied-à-terre in Montreal before the ban goes into effect.

While it exempts recent resident arrivals, the ban comes amid Canada’s aggressive recent immigration targets announced last month to fill nearly 1,000,000 job vacancies across the country. The government has proposed to confess 465,000 recent everlasting residents in 2023 and greater than 500,000 in 2025, regardless that applications for everlasting residence have fallen sharply this 12 months, in response to government data. During a press conference where the goals were announced, Sean Fraser, Canada’s Immigration, Refugee and Citizenship Minister, said: “Look, it’s easy for me: Canada needs more people.”

But Mr Cryne said the law could backfire. “It could have a chilling effect on individuals who need to move here, work here and cool down with their families,” he said.

Jenny Kwan, a Vancouver East MP and housing critic for Canada’s opposition New Democratic Party, said the law was missing the actual culprits of the housing crisis. “The government should be guided by real estate investment funds,” or firms that spend money on real estate for a profit, she said. “We need to scale back the financialization of housing.”

Some of those ideas are already in place and, combined with rising rates of interest and inflation, are slowing down price growth. This 12 months, the Trudeau government introduced an anti-hopping tax to discourage real estate speculators, in addition to an “underused property” tax on international owners whose residences remain vacant for greater than 180 days a 12 months.

Earlier this 12 months, the Canadian Mortgage and Housing Corporation reported that 3.5 million more homes would must be built by 2030 to bring all Canadians to affordability, but housing affordability campaigns “focused on suppressing demand, reminiscent of taxes on foreign buyers, and are politically helpful,” said Kevin Crigger , president of the Toronto Regional Real Estate Board, an industry association. “But for the last decade, we have been calling on the federal government to have a look at supply.”

So far, Canada’s largest cities are seeing fewer international buyers in the marketplace. In Greater Toronto, “foreign market share is at most 3 to six percent,” said Crigger. “Even if it’s that top, it doesn’t exist within the grand scheme of things.”

But there appears to be a recent wave of international buyers waiting for his or her time, willing to attend for the ban to finish. Pauline Aunger, real estate broker at Royal LePage Advantage in Smith’s Falls, Ontario, said she noticed a flurry of purchases after the primary announcement in April. She said since then, customers have been expecting guidance but not buying: “It’s a situation where you will have to attend.”

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