It has been more than a month since Canada’s two-year ban on foreign buyers kicked in, and navigating the complexities of the new legislation continues to be challenging for many realtors across the country. 

While most real estate experts feel the new legislation will have a negligible impact on the overall real estate market because so few transactions involve foreign buyers in the country, the real estate industry is still trying to get some clarity on some of the regulations.

Non-Canadians are banned from purchasing residential properties in Canada, with some exceptions. Homes outside a census metropolitan area (CMA) or a census agglomeration (CA) are excluded. 

A CMA and CA are geographical regions defined by Statistics Canada. They are determined based on the number of people living in the area and their commuting patterns. The core of a CMA or CA is the population center and must have a minimum population of 100,000 for a CMA and 10,000 for a CA. 

Confusions among realtors

Elton Ash, executive vice-president, Re/Max Canada, says realtors remain confused about the legislation.

“The federal government released the regulations so late. I mean 10 days before implementation… and the real estate boards are still doing research on it, and in fact, as a member of the Okanagan Real Estate Board, I just received an email from them as an example of more details,” said Ash.

“The confusion is really around what census areas actually fall under the foreign buyer bill. When you look at British Columbia, the Greater Vancouver, Lower Mainland area, and Kelowna, Kamloops, where are the boundaries? Because it’s not really clear for these census areas.

“There’s this weird kind of definition around the regulations that realtors find confusing…realtors aren’t supposed to be the policemen for this, and yet they can be found at fault if they aid and abet someone who is directly trying to circumvent the regulations . . . It’s a great example of government bureaucracy run amok.”

Impact expected to be muted

Don Kottick, president and CEO, Sotheby’s International Realty Canada, said the foreign buyer’s legislation will have a negligible effect on the real estate market because traditionally, only two to three per cent of the market is foreign buyers.

“Unfortunately, this type of policy from a welcoming country such as Canada has created a lot of confusion because they’re saying this doesn’t reflect Canadian values. Why is Canada putting this restriction when (it has) always welcomed immigrants? So there’s some confusion in terms of why the government did this, especially in light of the fact it had negligible impact on the market,” he said.

“We’ve had a few times where our realtors have engaged lawyers just to make sure that all the i’s are dotted, and the t’s are crossed because of the complexity and the variations and the confusion around that whole piece of legislation. So we have reached out to some legal advice in a few situations to help us navigate.”

Immigration influx

Michael Lam, president and CEO of Sutton Group Management Ltd. in the Vancouver area, said any so-called foreign buyers who purchased in the past two or three years were ones who were going to become permanent residents and move to Canada.

“A true foreign buyer will be someone who is a foreigner who has no plans to move over here but would like to have a vacation home. Those are true foreign buyers. In the past two or three years, I do not see any real foreign buyers buying. There are some buyers who have foreign status but not quite foreign because they plan to move to Canada in a short period of time,” said Lam.

Lam believes the ban will have minimal impact on prices, adding the real issue is not enough housing supply to meet the growing demand. 

“When you allow 500,000 people to immigrate to Canada, and we don’t have enough space, especially Vancouver, when the government takes such a long and ridiculous approval to get (new developments) approved . . . that’s really where the problem is.”

The situation in Canmore, Alberta

Brad Hawker, associate broker with Royal LePage Solutions in Canmore, Alberta, says the foreign buyer legislation for realtors in the resort mountain community is clear. The prohibition applies to non-Canadians in Canmore.

“When it was announced that they were working on the legislation, interestingly, we did get a pick up of activity of people looking because it came across their radar,” he said.

“It’s not a huge segment of our market. And so if people are thinking it’s going to be material for demand, prices in our market, it’s not really material. Leading up to January 1, we did have a pick-up in inquiries, and some of them were people that were just trying to get clarification. A lot of them were ex-pats that were trying to make plans or understand how their plans could be impacted if they were going to be purchasing in 2023 or 2024.”

Confusion among buyers

Hawker says some transactions his brokerage has had this year involved ex-pats married to non-Canadians, living outside of the country– many of them have chosen just to put the Canadian on the title.

“…there’s nothing that says that they couldn’t put their non-Canadian resident spouse on there, but there isn’t anything clearly saying that you can. So it was just easier to leave them off at this point,” explained Hawker.

He said there are far more people that look at buying a property than those who ultimately purchase. On average, 10 to 15 foreign buyers typically buy a residential property in the Canmore area each year, Hawker says. For example, last year, the market had a total of 556 transactions.

On its website, the British Columbia Real Estate Association said: “Certain aspects of the Foreign Buyers Ban still lack clarity, including the exemptions. Under CREA’s jurisdictional leadership, we are actively engaged in ongoing dialogue with federal policymakers, legal experts, Statistics Canada, the Canadian Mortgage and Housing Corporation and other stakeholders for clarification on the ambiguities.”