The new law does not cover recreational properties—from ski homes to lakefront cottages—outside of the country’s major cities
A new law prohibiting foreign investors from buying residential property in Canada for two years isn’t as restrictive as it seems.
Enacted Jan. 1, the ban is intended to cool Canada’s white-hot housing market by freeing up supply for priced-out locals.
Despite its fearsome name, the Prohibition on the Purchase of Residential Property by Non-Canadians Act isn’t all-encompassing, however. And for non-Canadians who’ve been thinking about buying a British Columbia ski cabin or an Ontario country cottage, the timing might actually be fortuitous.
First, the legislation carves out exceptions for a swath of prospective buyers, including students, refugees, diplomats, those with permanent resident status in Canada, and the spouses of Canadian citizens, according to Richard Burgos, a partner at Montreal law firm Lavery who specializes in real estate.
More: House Hunters Should Lay Down the Groundwork to Strike When Mortgage Rates Drop
Second, the ban does not cover “recreational” properties outside of Canada’s populous urban centers, Mr. Burgos said. “It’s based on a complicated formula concocted by Statistics Canada, but the exceptions to the ban are less-dense population centers of fewer than 10,000 people,” he said. Likewise, multifamily properties of four or more dwellings are exempted, Mr. Burgos explained.
Considering those loopholes, and a market already tamed by higher interest rates, “there are opportunities for foreign buyers,” said Steven Lafave, managing director of Engel & Volkers Tremblant in Quebec.
“Some people have just written off Canada for two years because of the ban, but it’s business as usual here,” said Mr. Lafave, whose ski-country territory, about 80 miles northwest of Montreal, is hugely popular with foreigners. “Until the pandemic, foreign buyers made up 20%-25% of our market,” he said. “We’re seeing visitors return, and I’ve never seen the kind of traffic in Tremblant that I’m seeing now.”
Because the region’s luxury buyers tend to pay cash, they’re less affected by interest-rate hikes, and prices have held steady, Mr. Lafave said. Meanwhile, “Americans and other foreign buyers can still take advantage of a favorable currency exchange” to find values, he added. The Canadian dollar is worth about 74 cents to the U.S. dollar at current rates.
Enacted Jan. 1, the ban is intended to cool Canada’s white-hot housing market by freeing up supply for priced-out locals.
Despite its fearsome name, the Prohibition on the Purchase of Residential Property by Non-Canadians Act isn’t all-encompassing, however. And for non-Canadians who’ve been thinking about buying a British Columbia ski cabin or an Ontario country cottage, the timing might actually be fortuitous.
First, the legislation carves out exceptions for a swath of prospective buyers, including students, refugees, diplomats, those with permanent resident status in Canada, and the spouses of Canadian citizens, according to Richard Burgos, a partner at Montreal law firm Lavery who specializes in real estate.
More: House Hunters Should Lay Down the Groundwork to Strike When Mortgage Rates Drop
Second, the ban does not cover “recreational” properties outside of Canada’s populous urban centers, Mr. Burgos said. “It’s based on a complicated formula concocted by Statistics Canada, but the exceptions to the ban are less-dense population centers of fewer than 10,000 people,” he said. Likewise, multifamily properties of four or more dwellings are exempted, Mr. Burgos explained.
Considering those loopholes, and a market already tamed by higher interest rates, “there are opportunities for foreign buyers,” said Steven Lafave, managing director of Engel & Volkers Tremblant in Quebec.
“Some people have just written off Canada for two years because of the ban, but it’s business as usual here,” said Mr. Lafave, whose ski-country territory, about 80 miles northwest of Montreal, is hugely popular with foreigners. “Until the pandemic, foreign buyers made up 20%-25% of our market,” he said. “We’re seeing visitors return, and I’ve never seen the kind of traffic in Tremblant that I’m seeing now.”
Because the region’s luxury buyers tend to pay cash, they’re less affected by interest-rate hikes, and prices have held steady, Mr. Lafave said. Meanwhile, “Americans and other foreign buyers can still take advantage of a favorable currency exchange” to find values, he added. The Canadian dollar is worth about 74 cents to the U.S. dollar at current rates.
“Our main issue now is that inventory evaporated through the pandemic,” Mr. Lafave said. “But it’s slowly coming back.” Mr. Lafave’s listings include a 16,794-square-foot mansion on 5.2 acres in Mont Tremblant for C$24.1 million (US$18.08 million)."In Whistler, British Columbia, where Americans and other non-Canadian buyers have been a growing presence, “there are phenomenal opportunities and great values, when you consider the currency exchange,” said Max Thornhill, a partner at Engel & Volkers Whistler. “We’ve seen extreme price increases over the last couple of years, but prices are now holding.”
The average home price in Whistler soared to C$4.853 million in 2022 from C$4.139 million the previous year, according to Mr. Thornhill, but buyers can still get a really nice home 10 minutes outside the village of Whistler for about C$3 million.
“Every step you take away from the village makes prices a little more affordable,” Mr. Thornhill said, and Whistler and its surrounding towns are exempt from the foreign-buyer ban.
More: As Property Values Slump in the U.S., It’s Time to Get Your Home Reassessed and Lower Your Tax Bill
Parts of Canada generally overlooked by foreign buyers may even offer bargains. Outside of Calgary, Alberta, tiny villages like Nanton and Beiseker offer “postcard scenery, open space, access to world-class winter sports and great cell reception to boot,” said Justin Havre, team leader at Justin Havre & Associates Re/Max First in Calgary. “We’re already considered one of the most affordable regions in Canada, but you see more foreign buyers near cities like Vancouver, Toronto or Montreal.” Mr. Havre’s listings include a 4,078-square-foot mansion on 16 manicured acres in rural Rocky View County for C$4.95 million.
In the smaller cities and towns that make up Ontario’s “cottage country,” the ban has caused “total confusion,” said Chris Costabile, managing partner and agent at The Agency in Brantford, about 65 miles southwest of Toronto. “Inquiries from foreign buyers have halted, and new construction is basically stagnant,” he said. “The message has not been conveyed properly about how the law works.”
More: The Hidden High Costs of Rocky Mountain Living
With that in mind, any buyer, especially those paying all cash, should buy real estate in the next eight months to seize on reduced competition “before the government starts cutting interest rates again in the fall,” Mr. Costabile said. While prices in popular regions like Muskoka continue rising, “there are really good deals to be had from C$500,000 to C$1 million, depending on proximity” to the region’s many lakes, he said.
Towns along the Lake Erie coastline, including Turkey Point, Sherkston Shores and Crystal Beach, may also offer gentler prices, Mr. Costabile said, “but it’s important to partner with a local realtor.
“Right now is a perfect time to buy,” he added. “We just need to make everyone aware that they actually can buy.”
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The average home price in Whistler soared to C$4.853 million in 2022 from C$4.139 million the previous year, according to Mr. Thornhill, but buyers can still get a really nice home 10 minutes outside the village of Whistler for about C$3 million.
“Every step you take away from the village makes prices a little more affordable,” Mr. Thornhill said, and Whistler and its surrounding towns are exempt from the foreign-buyer ban.
More: As Property Values Slump in the U.S., It’s Time to Get Your Home Reassessed and Lower Your Tax Bill
Parts of Canada generally overlooked by foreign buyers may even offer bargains. Outside of Calgary, Alberta, tiny villages like Nanton and Beiseker offer “postcard scenery, open space, access to world-class winter sports and great cell reception to boot,” said Justin Havre, team leader at Justin Havre & Associates Re/Max First in Calgary. “We’re already considered one of the most affordable regions in Canada, but you see more foreign buyers near cities like Vancouver, Toronto or Montreal.” Mr. Havre’s listings include a 4,078-square-foot mansion on 16 manicured acres in rural Rocky View County for C$4.95 million.
In the smaller cities and towns that make up Ontario’s “cottage country,” the ban has caused “total confusion,” said Chris Costabile, managing partner and agent at The Agency in Brantford, about 65 miles southwest of Toronto. “Inquiries from foreign buyers have halted, and new construction is basically stagnant,” he said. “The message has not been conveyed properly about how the law works.”
More: The Hidden High Costs of Rocky Mountain Living
With that in mind, any buyer, especially those paying all cash, should buy real estate in the next eight months to seize on reduced competition “before the government starts cutting interest rates again in the fall,” Mr. Costabile said. While prices in popular regions like Muskoka continue rising, “there are really good deals to be had from C$500,000 to C$1 million, depending on proximity” to the region’s many lakes, he said.
Towns along the Lake Erie coastline, including Turkey Point, Sherkston Shores and Crystal Beach, may also offer gentler prices, Mr. Costabile said, “but it’s important to partner with a local realtor.
“Right now is a perfect time to buy,” he added. “We just need to make everyone aware that they actually can buy.”
Click for more in-depth analysis of luxury lifestyle news
