Canada may ban some foreigners from buying real estate

Canada may ban some foreigners from buying real estate

The government promises to end the housing crisis.

Ahead of the upcoming election, Canadian party leaders are trying to get voters on their side. Prime Minister Justin Trudeau has announced a new housing plan, which he promises to implement if he wins. The plan includes a temporary ban on speculation in the real estate market, as well as the purchase of housing by certain categories of foreigners.

The idea is to abandon the sale of housing to wealthy foreign nationals and workers who constantly move from place to place, and leave the property for residents of Canada. Such actions are expected to cool the market, reduce demand for housing and stop the increase in prices that has been going on for a long time.

Housing affordability before the election was a particularly debated topic. During the pandemic, Canada faced a crisis: property values soared even in small communities. Rising prices are making the dream of owning a home almost out of reach for the average family under 40. And in big cities, the chances of buying real estate are tending towards zero: prices for detached homes in Toronto's suburbs exceed $1 million CAD, and in Toronto itself, $1.75 million CAD.

"As a temporary measure to stabilize the housing market due to COVID-19, we will prohibit foreign nationals from purchasing residential property in Canada that is not intended for recreation for the next two years, unless the purchaser confirms that they plan to work or immigrate to Canada," the Liberal Party website states.

Trudeau's plan also includes a new rental housing program, doubling the tax credit for first-time home buyers, creating a tax-free investment account for first-time home buyers, and building 1.4 million new homes over 4 years.

The Liberal Party also plans to issue a new Buyers' Rights Act to end blind bidding, enshrine the right for buyers to inspect homes before purchase, and require agencies to publish property sales histories with prices. Due to quarantine restrictions and high demand for homes in Canada, practices such as buying homes without a preview and at higher prices than the seller originally asked for have spread. Also, the buyer will be required to own the new property for at least a year, the exception being an abrupt change in life circumstances.

Justin Trudeau isn't the only one who has unveiled a plan to combat the housing crisis. Erin O'Toole, leader of the Conservative Party, has promised to build about a million new homes in three years and let 15% of federal government properties go to residents. The Conservatives also promised a two-year ban on home sales to foreigners.

Jagmeet Singh at the head of the New Democratic Party has proposed a program to build about 500,000 affordable homes over the next decade, a 20% tax on foreign buyers and the creation of a 30-year mortgage insurance program.

Source
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