(uniquement en anglais)
Par Nidhi Verma
Introduction: Framing the Policy in Context
Over the past decade, Canada has witnessed a worsening housing crisis marked by soaring prices, deepening affordability gaps, and increasing inaccessibility, especially in urban hubs such as Toronto, Vancouver, and Montreal. The root causes of this crisis are multifaceted, involving a confluence of rapid population growth, insufficient housing supply, foreign capital inflows, domestic speculation, and a concentration of demand in metropolitan centers. According to the Canada Mortgage and Housing Corporation (CMHC), an estimated 5.8 million new homes would need to be built by 2030 to restore affordability for Canadians.1 In response, federal and provincial governments have implemented a suite of regulatory interventions aimed at reining in market excesses and restoring balance.
Among the most controversial of these interventions is the Prohibition on the Purchase of Residential Property by Non-Canadians Act, (the “Foreign Buyers Ban”), which came into effect on January 1, 2023.2 This legislation prohibits most foreign nationals from purchasing residential real estate in Canada, with certain exceptions. The policy objective is to curb speculative demand and ease pressure on housing prices by limiting the participation of foreign investors in Canadian real estate markets.3 It is premised on the assumption that foreign ownership is a significant driver of affordability challenges, particularly in high-demand markets.
While the Prohibition Act is a bold attempt to address growing public concern over housing unaffordability, it raises serious legal, economic, and policy-based concerns. It potentially contravenes the spirit of “Canada’s Charter of Rights and Freedoms”, risks undermining Canada’s commitments to multiculturalism and open immigration, and distracts from the structural underpinnings of the housing crisis, such as zoning restrictions, infrastructure deficits, and underinvestment in non-market housing.
While the foreign buyers ban is politically expedient and symbolically resonant, it is ultimately a misdirected policy instrument. It imposes disproportionate barriers on non-Canadians, conflicts with the foundational values of Canadian constitutionalism, and fails to engage meaningfully with the systemic causes of housing unaffordability. Through a holistic analysis of legal norms, economic data, and policy principles, this paper will critically examine the effectiveness and legitimacy of the Prohibition Act and argue for a more comprehensive and inclusive approach to housing reform.
Legislative Overview: Purpose, Scope, and Exceptions
The Prohibition on the Purchase of Residential Property by Non-Canadians Act, enacted in 2022 and effective from January 1, 2023, aims to curb speculative investment in Canadian residential real estate by prohibiting non-Canadians from purchasing residential properties for a period of two years.4 The Prohibition Act defines “non-Canadians” to include individuals who are neither Canadian citizens nor permanent residents, as well as foreign corporations and entities controlled by non-Canadians.5
Under Section 4(1) of the Prohibition Act, non-Canadians are prohibited from purchasing, directly or indirectly, any residential property in Canada.6 However, it outlines several exceptions. Notably, the prohibition does not apply to:
- Temporary residents who meet prescribed conditions;
- Protected persons under the Immigration and Refugee Protection Act;
- Non-Canadians purchasing residential property with their Canadian spouse or common-law partner;
- Foreign states purchasing property for diplomatic or consular purposes.7
Furthermore, it aims to prohibit non-Canadians from purchasing residential properties located within census metropolitan areas (CMAs) and census agglomerations (CAs), thereby excluding properties in rural areas.8
The Prohibition Act’s regulations also exempt certain types of properties and transactions. For instance, purchases of buildings containing four or more dwelling units are not prohibited, nor are acquisitions of vacant land zoned for residential or mixed use, following amendments made on March 27, 2023. These amendments also introduced an exception allowing non-Canadians to purchase residential property for development purposes, provided the development is not solely for leasing or renting.9
These exceptions raise critical concerns about the Prohibition Act’s internal coherence and equity. If the goal is to curb speculative investment, permitting the acquisition of multi-unit buildings and development properties suggests an underlying aim to redirect foreign capital into commercial investments rather than residential homes for living. This approach may diminish the legitimacy of the Prohibition Act’s stated purpose and disproportionately affect individuals seeking to build a life in Canada. Rather than fostering inclusion, the Prohibition Act appears to prioritize wealth-driven investment over community-building and homeownership.
Charter Rights and the Question of Discrimination
At the heart of the legal discourse surrounding Canada’s foreign buyer ban lies the question of whether it infringes upon the rights enshrined in the “Canadian Charter of Rights and Freedoms”. Specifically, the analysis turns to section 15(1) of the “Charter”, which guarantees equality before and under the law, and the right to equal protection and equal benefit of the law without discrimination.10 The critical legal issue is whether the foreign buyer ban discriminates on the basis of immigration status.
In the case of Li v British Columbia, a foreign national contested the constitutionality of British Columbia’s foreign buyer tax.11 Ms. Li, a Chinese citizen residing in Canada on a work permit, argued that the additional property transfer tax imposed solely based on her immigration status constituted discrimination under Section 15 of the “Canadian Charter of Rights and Freedoms”, which guarantees equality rights.12
In Li v British Columbia, the Court held that immigration status is neither an enumerated nor an analogous ground under Section 15, thereby upholding the tax.13 The Court reasoned that the tax aimed to address housing affordability and did not perpetuate disadvantage or stereotyping against non-citizens.
The British Columbia Court of Appeal affirmed this decision in Li v. British Columbia, concluding that the tax provisions did not infringe upon Section 15 rights.14 The Court emphasized that while the legislation distinguished based on immigration status, this distinction did not amount to discrimination under the “Charter”.
While the Li case addressed a financial burden, a supplementary property transfer tax, the federal Prohibition Act imposes a more severe restriction by enforcing an outright ban on property purchases by non-Canadians. This prohibition raises additional constitutional concerns, particularly under Sections 6 and 7 of the “Charter”.15
Section 6 of the “Charter” protects the mobility rights of Canadian citizens and permanent residents, allowing them to move to and take up residence in any province.16 However, Section 7 guarantees the right to life, liberty, and security of the person to "everyone" in Canada, including non-citizens.17 Denying individuals the opportunity to purchase a home, a fundamental aspect of personal security and stability, could be interpreted as infringing upon these rights.
This distinction between a tax and an outright prohibition necessitates closer judicial scrutiny. While the courts in Li upheld a financial imposition on non-citizens, the complete denial of property ownership rights under the federal Prohibition Act may be viewed as a more profound infringement on individual liberties, potentially violating the broader protections afforded by the “Charter”.
Economic Contributions of Foreign Buyers: Revenue, Investment, and Rental Supply
Foreign buyers, contrary to popular belief, play a multifaceted and significant role in Canada’s real estate economy. Their participation generates tax revenues, increases rental housing supply, injects capital into under-served regions, and contributes to new housing development.
Foreign buyers contribute substantially to government revenue through a range of taxes and fees. In Ontario, for example, the Non-Resident Speculation Tax (NRST) levies a 20% tax on the purchase of residential property by foreign nationals, corporations, and trustees.18 Similarly, British Columbia imposes an additional property transfer tax on foreign buyers in specific regions.19
Notably, many of these buyers do not utilize public services funded by their tax dollars, such as healthcare or education, which results in a net fiscal gain for provinces and municipalities.20 These contributions challenge the common narrative that foreign buyers are a drain on public resources.
Foreign investment is often directed into condominium units that are subsequently rented out, especially in tight urban housing markets like Toronto and Vancouver. A report by RBC Economics found that investors; many of whom are foreigner, added over 200,000 condominium rental units to the housing supply in Canada’s four largest cities over the last 15 years.21 This has had a stabilizing effect on rental prices by increasing available inventory.
Further, policy proposals have emerged suggesting that Canada could allow foreign investors to purchase units under the condition that they are retained as long-term rentals. This model could maintain and grow the rental housing stock without compromising ownership opportunities for Canadian residents.22
Beyond urban centers, foreign buyers often purchase homes in suburban or rural areas, infusing capital into local economies. These regions may not attract the same level of domestic investment, and foreign interest can thus help distribute economic growth more equitably across the country. This dynamic is particularly important in smaller communities struggling with economic stagnation or depopulation.
Foreign buyers often pay premium prices, which supports property values and provides liquidity for real estate development. This capital injection is especially crucial in a country like Canada, which faces chronic under-building and an acute housing supply deficit.23 A CMHC report indicates that Canada needs an additional 3.5 million units beyond projected construction by 2030 to restore affordability.24 Channeling foreign capital into socially beneficial development could therefore be part of a long-term solution.
While concerns about affordability are real and urgent, a blanket prohibition on foreign buyers may undermine the nuanced and beneficial roles these buyers can play in Canada’s housing economy. A more effective strategy would involve regulatory mechanisms that promote inclusive, sustainable, and productive investment rather than indiscriminate exclusion.
Willingness to Pay Higher Prices: Market Realities and Investment Preferences
Foreign buyers are often characterized by their willingness to pay a premium for Canadian real estate. This willingness stems from various factors, including the stability of the Canadian economy, the transparency of its legal and financial systems, and the international reputation of its cities as desirable places to live and invest. These motivations are not inherently harmful; in fact, they reflect confidence in Canada’s real estate market and institutional integrity. For many foreign nationals, especially those planning to immigrate or who already reside temporarily in Canada, purchasing property is not merely a financial decision but a strategic and emotional investment in their future.
The current law, however, views this willingness to pay more as a threat to affordability, assuming that these buyers inflate housing prices to unsustainable levels. Yet, research does not consistently support the notion that foreign buyers alone drive up property values. Housing affordability is shaped by multiple variables; interest rates, supply constraints, population growth, zoning regulations, and attributing market dysfunction to one segment of buyers oversimplifies a complex issue. For instance, a report by the Canada Mortgage and Housing Corporation (CMHC) indicates that foreign ownership of Canadian homes is estimated to have declined to around 1%, challenging the notion that foreign buyers significantly impact housing affordability.25
Moreover, this narrative unjustly vilifies foreign buyers who may simply wish to purchase a home to live in, just like any Canadian. The law treats their ability and willingness to pay higher prices as inherently problematic, without considering that many Canadian citizens also compete in these high-stakes markets. Foreign buyers are often ready to invest more not only in the property itself but in the community, infrastructure, and future of the area. When this group is sidelined, Canada loses out on valuable capital, not just monetary but also human and social.
The solution, therefore, is not to discourage this investment but to channel it in ways that support national housing goals. Measures like luxury taxes on speculative flipping or incentives for long-term rentals would be more targeted and equitable responses. For example, policy proposals have emerged suggesting that Canada could allow foreign investors to purchase units under the condition that they are retained as long-term rentals. This model could maintain and grow the rental housing stock without compromising ownership opportunities for Canadian residents.
Geographic Restrictions and the Urban-Rural Divide: Inequities in Policy Application
The Prohibition Act introduces a notable geographic distinction in its application. Specifically, the Prohibition Act prohibits non-Canadians from purchasing residential properties located within Census Metropolitan Areas (CMAs) and Census Agglomerations (CAs), while permitting such acquisitions in regions outside these designated areas. This delineation ostensibly aims to curb speculative investments in urban centers and stimulate development in rural locales.26
However, this bifurcation inadvertently fosters a two-tiered housing market. Urban centers, characterized by robust infrastructure, employment opportunities, and cultural amenities, become inaccessible to non-Canadian buyers seeking long-term settlement. Conversely, rural areas, often lacking comparable resources, remain open to foreign investment. This geographic restriction overlooks the lived realities and preferences of prospective buyers, particularly those who reside, study, or work in urban environments and wish to establish permanent roots therein.
Moreover, the Prohibition Act’s exemptions further complicate its equitable application. Notably, non-Canadians are permitted to purchase residential properties comprising four or more dwelling units, regardless of their location within CMAs or CAs. This provision allows for continued corporate-scale investments in urban areas, potentially exacerbating housing affordability issues. Such inconsistencies suggest that the policy may prioritize economic optics over substantive equity, restricting individual buyers while accommodating larger investment entities.27
A more nuanced approach would involve implementing location-sensitive, income-adjusted eligibility criteria for property purchases. This strategy would better align with the diverse needs of potential homeowners and support the overarching goal of fostering inclusive, sustainable communities across Canada.
Linking Immigration to the Housing Shortage: A Misplaced Correlation
A growing narrative in Canadian public discourse posits that immigration significantly contributes to the country’s housing affordability crisis, suggesting that the influx of newcomers drives up demand and thus prices. However, this perspective lacks nuance and empirical support. Immigration is a cornerstone of Canada’s demographic and economic strategy, especially given the country’s aging population and declining birth rate.28 Immigrants bring not only essential labour and skills but also innovation, entrepreneurship, and cultural diversity, traits that are vital to long-term national development.
Blaming immigrants or foreign nationals for the housing crisis overlooks deeply entrenched structural issues in Canada’s housing market. These include restrictive zoning laws, protracted municipal approval processes, and insufficient government investment in affordable housing.29 Many immigrants actually work within the real estate and construction industries, directly contributing to the very housing supply that policymakers claim is under pressure.30 They are thus part of the solution, not the problem. The foreign buyer ban sends a contradictory message: while newcomers’ labour and tax dollars are welcomed, their aspirations for long-term settlement and homeownership are not.
This disjunction is especially problematic given that for many immigrants, purchasing a home is a key milestone in their journey toward integration and stability. Denying them access to this fundamental asset risks creating a second-tier residency status in which individuals are deemed good enough to build the country but not to own a piece of it.31 Such exclusionary measures undermine Canada’s foundational values of equity and multiculturalism.
Moreover, policies that push foreign buyers into rural areas, where investment is permitted, do not reflect the lived realities of newcomers, most of whom live, work, and study in urban centres. These individuals seek long-term roots in communities that offer access to transit, education, healthcare, and employment, resources concentrated in cities.32 A truly inclusive housing policy must recognize immigrants not as passive burdens on infrastructure but as active agents of economic and social growth.
Canada as a ‘Home Away From Home’
For many foreign buyers, especially those with personal, familial, or professional ties to Canada, the decision to purchase property here transcends mere financial investment. It is an emotional and symbolic act; one that represents a declaration of belonging, a commitment to building a future in the country, and a tangible step toward integration and eventual settlement. Canada’s international reputation as a welcoming, inclusive, and multicultural society has historically attracted individuals from around the world who view the country not just as a land of opportunity but also as a potential home. However, legislative actions such as the “Prohibition on the Purchase of Residential Property by Non-Canadians Act ” commonly referred to as the foreign buyer ban can significantly undermine this image by sending a contradictory message: that foreigners are welcome only if they conform to narrowly defined economic roles or contribute in specific, measurable ways.33
This exclusionary stance is particularly disheartening for individuals already residing in Canada on a temporary basis; international students, temporary foreign workers, and live-in caregivers, who actively contribute to the Canadian economy and society. These individuals often view homeownership as a foundational milestone in their journey toward permanent residency and full societal inclusion. By prohibiting them from purchasing homes, the law implicitly signals that despite their labour, cultural contributions, and integration efforts, they remain outsiders with limited rights to participate fully in Canadian life.34
The repercussions of such policies extend beyond the immediate housing market. They can exert a chilling effect on future immigration flows. In an increasingly competitive global environment, skilled workers have numerous options. Countries such as Australia, Germany, and New Zealand have adopted more welcoming policies to attract high-caliber talent. If Canada is perceived as hostile, protectionist, or unwelcoming, especially in ways that contradict its espoused values of diversity and inclusivity, it risks losing its competitive edge in the global race for talent. Thus, the implications of the foreign buyer ban are not limited to real estate markets; they speak to broader concerns around national identity, social cohesion, and the long-term sustainability of Canada’s immigration and economic strategies.
Toward a Balanced Approach: Policy Alternatives and Recommendations
Rather than relying on a blanket prohibition on foreign property ownership, Canada would be better served by implementing more nuanced, evidence-based policy solutions that uphold both housing affordability and fundamental fairness. A blanket ban risks being overbroad and punitive, capturing not only speculative foreign investors but also temporary residents with genuine intentions to integrate into Canadian society. A more balanced approach would involve the adoption of a tiered taxation system; one that differentiates between speculative investors engaged in short-term flipping and long-term foreign residents who contribute economically and socially to the country.35
For example, a higher property transfer tax on purchases made by non-resident investors with no intention of settling could act as a disincentive for speculative activity while preserving pathways for inclusion for those who see Canada as home.36 British Columbia’s Speculation and Vacancy Tax, and Ontario’s Non-Resident Speculation Tax, while controversial, offer models that target investment behavior without imposing blanket restrictions.37
In addition to demand-side measures, supply-side interventions must play a central role in addressing housing affordability. The federal and provincial governments should prioritize policies that increase the overall housing stock, including relaxing restrictive zoning bylaws, streamlining permitting processes, and offering incentives to developers to construct affordable and multi-family housing units.38 Investment in public housing and non-profit housing cooperatives would also help alleviate pressure in overheated markets.39 These structural reforms address the root causes of housing shortages more effectively than exclusionary bans.
Moreover, the current legal framework would benefit from greater clarity and fairness regarding exemptions for temporary residents such as international students, essential workers, and caregivers. These individuals often reside in Canada for years, contribute to the economy, and intend to become permanent residents. By excluding them from homeownership opportunities, the legislation undermines their integration and sends an inconsistent message about their value to Canadian society.40 Reforms should carve out exemptions for these groups and incorporate their perspectives in the policy-making process.
Finally, Canada must consider the long-term geopolitical and economic message conveyed by such exclusionary policies. In a globalized economy where capital is mobile and countries actively compete for skilled labour and foreign investment, signaling that foreign buyers are unwelcome may backfire. Rather than viewing foreign participation in housing markets as a threat, policymakers should aim to channel foreign capital into areas that benefit the broader community: such as infrastructure, social housing, and public-private partnerships for urban development.41 Policies should encourage socially responsible investment rather than deter international engagement altogether.
Ultimately, striking a balance between market regulation and openness to global participation is essential. Canada’s success as a multicultural and economically vibrant nation depends not only on controlling speculation but also on fostering inclusion, fairness, and sustainable growth.
Conclusion
The “Prohibition on the Purchase of Residential Property by Non-Canadians Act” was introduced with the noble aim of making housing more affordable for Canadians. However, its design and implementation reveal critical flaws. By targeting foreign buyers indiscriminately, the law fails to address the structural causes of housing unaffordability and instead scapegoats a group that contributes positively to the economy and society. Legal precedents like Li v. British Columbia suggest that while immigration status may not be a protected Charter ground, the deeper implications of exclusionary policies must still be scrutinized. Economically, the ban discourages investment, limits rental supply, and sends a negative signal to global talent. Socially and symbolically, it undermines Canada’s identity as a multicultural, inclusive nation. Going forward, Canadian housing policy must prioritize evidence over emotion, inclusion over exclusion, and structural reform over simplistic bans. Only then can it truly claim to serve the public interest.