Canada’s Foreign Buyer Ban: What It Means for Overseas Buyers

In its federal budget report, released on April 7, 2022 and titled “Making Housing More Affordable,” Canada’s government proposed banning foreign commercial entities and people who are not Canadian citizens or permanent residents from buying non-recreational residential property for two years. The stated goals were to help stabilize local home prices and increase the supply of housing available to residents.

At the time the measure was announced, it had not yet taken effect and still required approval from Canada’s Parliament. The ban — the Prohibition on the Purchase of Residential Property by Non-Canadians Act — did go on to pass: it came into force on 1 January 2023, and in February 2024 the federal government extended it from its original 1 January 2025 expiry to 1 January 2027.

Zagdim spoke with two Canadian real estate professionals — Jon Chow, a licensed real estate agent in British Columbia and sales director at Regent Park Realty (HK), and Hilary, marketing manager at Pacific Property Group — about what the proposed ban covers and how the market was reading it.

What the Proposed Ban Covers

The core measure is a two-year ban on foreign commercial entities and non-Canadian citizens or permanent residents buying non-recreational residential property. “Non-recreational” residential property was distinguished from recreational homes such as lakeside cottages or ski properties; whether a specific property counts as residential or recreational is determined by each province or municipality’s zoning rules.

People holding a valid Canadian work permit or study permit are exempt from the ban. A foreigner buying a home in Canada to use as their primary residence is also exempt. At the time the two interviews were given, the government had not yet published full details of the exemptions — Jon Chow said it was unclear whether a foreign buyer could become a Canadian homeowner through a gift from someone else, and even less clear how inheritance would be treated, because the detailed rules had not been released.

A second, related measure announced in the same budget: starting with homes sold on or after January 1, 2023, if the property was held for less than 12 months before resale, the profit would be treated as business income and taxed in full. Exemptions apply for certain personal circumstances — death, disability or critical illness, a change in family size such as having a child or divorce, or a new job — that lead to a sale.

Does the Ban Need Parliament’s Approval?

At the time of these interviews, yes — the ban had not yet come into force and still needed to pass through Canada’s Parliament. It has since done so: see the ban’s current status above.

How Big a Role Do Foreign Buyers Actually Play?

Both professionals argued that foreign buyers are a small share of Canada’s housing market and that a ban would do little to cool prices.

Jon Chow pointed to Toronto and Vancouver — Canada’s two most closely watched markets — where, he said, foreign buyers owned well under 5% of properties, and 2021 data showed foreign buyers accounted for under 2% of transactions. He noted that these popular provinces already levy a foreign buyer tax, which has already reduced the volume of foreign buyer purchases. In his view, the new ban was unlikely to meaningfully hold back price growth.

Hilary put the real foreign-investor share of Canada’s overall real estate market at around 3%. Because of this, real estate developers and agents expected the policy would not affect the roughly 97% of sellers, or the increasingly competitive pool of buyers and renters made up of Canadians relocating or returning to Canada, who continued to drive overall pricing.

What Was Actually Driving Price Growth?

Hilary attributed Canada’s sharp price increases over the two years before these interviews to a mix of factors:

• Pandemic-era monetary easing across North America, with mortgage interest rates as low as 1.99%, giving people more money and cheaper borrowing to put into real estate.
• Rising immigration: Canada has admitted at least 300,000 immigrants a year as a matter of policy, and the government’s newly announced target for 2022–2024 raised that to at least 400,000 a year.
• A backlog of overseas applicants for immigration and work permits built up over two pandemic years, alongside two new border and immigration policies announced in late April 2022: travelers holding a foreign passport who had received two doses of a COVID-19 vaccine could enter Canada without providing a PCR or rapid test and without quarantining; and the federal Express Entry system would reopen draws for the Canadian Experience Class, Federal Skilled Worker and Federal Skilled Trades streams in July.
• Overall Canadian home prices had risen more than 50% over the two pandemic years. Toronto, the largest city, saw prices rise more than 20% year over year and had roughly tripled over the preceding decade — far outpacing local income growth. Vancouver, another sought-after market, saw prices rise more than 40% year over year.
• Canada’s large land area and small population also drew people, during the pandemic, toward homes with more space.

Jon Chow separately pointed to the same low-interest-rate environment, plus Canada’s abundance of land relative to its population, as reasons buyers kept bidding up prices even as affordability for younger residents in some provinces worsened.

What the Market Was Watching Instead

Rather than focusing on the foreign buyer ban itself, Hilary said domestic attention was on whether the Bank of Canada would keep raising interest rates (which would increase mortgage payment burdens), and on whether volatility in US stock markets — including instability in the stablecoin segment of the cryptocurrency market — would turn into a larger downturn, given how closely Canada’s market tracks the US economy.

She also noted that competition in the rental market remained intense: well-located homes could generally be rented out reliably, with potential rental yields of around 3–4%, even as overall property prices had already risen more than 50% since before the pandemic. For buyers aiming to generate steady income or planning to sell in three to five years, she said the new policies would not have a direct effect, and any foreign buyer tax cost could even be offset by continued price appreciation.

What This Means for Overseas Buyers

At the time of these conversations, Canada’s foreign buyer ban was a two-year budget proposal that had not yet been passed into law, with several details — including how gifts and inheritance would be treated — still unpublished. Both professionals interviewed expected its effect on prices to be limited, since foreign buyers already represented a small share of transactions and existing provincial foreign buyer taxes had already curbed that activity. Buyers with a Canadian work or study permit, or those buying a primary residence, were expected to be exempt. Given how much has moved in Canadian housing policy since these interviews, anyone considering a purchase should treat the specifics above — exemption categories, the ban’s duration, and the property flip tax — as the starting point for their own research rather than the final word, and confirm the current rules directly. For further guidance on navigating overseas property decisions, ask Zagdim.

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