February 14, 2023
What is it and how will it effect the Canmore market?
On January 1st of 2023 a new prohibition was enforced for Canada. The new act states that a non-Canadian will be prohibited from purchasing residential property, subject to certain exceptions, for 2 years.
A copy of the act is available here – https://laws-lois.justice.gc.ca/PDF/P-25.2.pdf
**Some thoughts below however please let us know if you have more questions as we can help facilitate getting you answers on it from local lawyers and accountants**
This new prohibition is in response to the rising costs of housing in Canada. The idea is that this will halt flipping houses and minimize the number of underused houses. It does beg the question if this will really solve the problem. Before we get into that, lets first break it down for you.
Who it applies to?
It refers to anyone who is NOT a Canadian citizen, permanent resident or person registered as an Indian under the Indian Act. It will also apply to non- Canadian corporations.
A non- Canadian corporation includes:
-A corporation that is not registered in under the Laws of a Canada or a Canadian province.
-A corporation that is incorporated under the laws of Canada but is controlled by a non-Canadian. The control is set under Regulations and includes direct or in-direct ownership of 3% or more shares.
What are the exceptions?
As with most Laws, of course, there are some exceptions. If you are a person who is a temporary resident under the immigration and refugee act, a protected person, if you are a non- Canadian who purchases property with your spouse or common law partner who is Canadian, or a person of a prescribed class of persons you are exempt from this new prohibition.
What properties are controlled under the new act?
The act states that any residential property, condominium, and vacant property that is zoned as residential or mixed use is prohibited from being purchased by a non-Canadian. Meaning, if the property is used to live in long term or short term it cannot be purchased by a non-Canadian as defined under the act.
Are there exceptions to the properties defined under the act?
Yes, there is certain properties that do not fall under this new prohibition. Any property that is outside of a census agglomeration. What does that mean? It basically means that the act may not apply to properties in small urban centers and non-urban areas. For example, the act DOES affect Canmore but smaller non-urban areas such as Drumheller are NOT affected.
A link to a map of the areas can be found here – https://www12.statcan.gc.ca/census-recensement/2021/geo/maps-cartes/referencemaps-cartesdereference/sgc-cgt/files-fichiers/2021-12572-01-C.pdf
So, will it effect Canmore?
As Canmore is a town with a high number of weekend/holiday homeowners we have historically seen a significant number of Non-Canadians purchase real estate. We have seen that number drop considerably in the last 10+ years and dropped to almost nothing during the height of the pandemic.
While some buyers will be frustrated they cannot purchase for these two years, it may have a larger effect on the market when they are allowed to enter the market again if the planned expiry of January 2025 follows course.
Time will tell of course but with a small reduction in buyers we may see an increase to our dreadfully low inventory but I do not expect it will be very significant. Should Non-Canadians want to spend time here they may choose to rent properties long term until they can buy which may make rental properties harder to come by for local Canmore residents and future residents (and/or raise the rental rates)
We know that this is a lot to absorb. It’s a lot of information and it will be interesting to see the outcome when the two years are up. Will it help with the lack of inventory? Will it slow down the rising cost of real estate? We will have to follow the housing price trends closely over the next couple of years.
If you are interested in following along with the housing price trends with the new prohibition instated, subscribe to, and read our monthly newsletters here. https://canmorerealestate.com/newsletter/