A Canadian law banning foreigners from buying property in the country went into effect on Sunday, as part of Prime Minister Justin Trudeau’s multi-pronged plan to crack down on soaring house prices.
The bill, dubbed the “Prohibition on the Purchase of Residential Property by Non-Canadians Act,” seeks to quell the country’s housing crisis by banning all outsiders — particularly investors — from purchasing property in its 10 provinces.
Passed by Parliament in June, the guidelines are a cornerstone of Trudeau’s proposal to stem speculation that has seen average home prices soar to a staggering $800,000 in the wake of the pandemic. The country’s housing market has yet to recover due to issues such as limited supply and opportunistic investors.
As a result, frantic bidding wars are now the order of the day, with more and more Canadians being sidelined by historic home highs — which are 38 percent higher than just three years ago.
Scroll down for the video:
A Canadian law barring foreigners from buying property in the country went into effect Sunday
The bill, dubbed the Non-Canadian Homebuying Act, is part of Prime Minister Justin Trudeau’s plan to tackle soaring house prices
In a press release touting the law – which is only a temporary two-year measure – Housing Secretary Ahmed Hussein reiterated how he and other Canadian officials stood behind the law.
“Through this legislation,” Hussein said late last month ahead of the bill’s passage.
He added, “We are taking steps to ensure the homes are owned by Canadians for the good of all who live in this country.”
The Trudeau party’s campaign website offered a similar statement on the guidance while also outlining the reasons for the recent volatility in the housing market.
“The attractiveness of Canadian homes attracts profiteers, wealthy corporations and foreign investors,” the Liberal Party of Canada wrote ahead of the law’s enactment Sunday.
“This leads to a real problem of vacant and vacant housing, rampant speculation and skyrocketing prices. Houses are for people, not investors.”
More Canadians are being ousted from historic highs — which are 38 percent higher than they were three years ago
Trudeau echoed that sentiment back in April at an event that announced his signing of the bill earlier in the month as part of the country’s proposed budget for the year.
During his speech, the 51-year-old Prime Minister – who narrowly won his third bid for the position in September – explained that the law was pushed through Parliament “to make life more affordable for Canadians and to boost our economy”.
Instead of real estate, the progressive – who has come under fire for strict lockdown measures during the Covi-19 pandemic that has seen several small businesses go out of business – explained that the newly drafted plan “invests in people”.
“Making life more affordable for Canadians … needs to start by looking at housing affordability,” Trudeau said of the $8.9 million budget, which Conservatives postponed months earlier over fears it would it would bring further economic uncertainty to the country.
“It’s a big problem for many Canadians and it’s a big problem to solve,” the Liberal leader continued, addressing citizens in front of a podium adorned with the phrase “Make Housing Affordable.”
A construction crane stands in Vancouver at the construction site of an office tower that was under construction last year. The Canada Mortgage and Housing Corporation reported that 3.5 million more homes would need to be built by 2030 to be affordable for all Canadians
“There is no silver bullet that can solve everything. That’s why our plan has three main pillars,” Trudeau said, before detailing what his party hopes to achieve with the new leadership.
“The first is to help people save to buy a home; the second focuses on housing supply to ensure we create more housing across the country; and the third puts an end to the speculation that is driving house prices up unnecessarily,” he said.
The three-time prime minister singled out Hamilton, Ontario, which, like countless cities across the country, has seen housing prices soar.
The port city — less than a two-hour drive across the Buffalo border — has seen real estate costs rise 16.8 percent in two years, with the median home price now standing at $761,244, even after rising 8, 9 percent had fallen.
Addressing the crowd, Trudeau acknowledged that this phenomenon is occurring “frankly across the country” and is failing the average Canadian while investors who bought properties before or in the early stages of the pandemic are making profits.
“Canada needs more affordable housing,” Trudeau said at the time. “If Canadians work hard and save, they should be able to afford a home.
“Houses are made to live in. Starting a family and building a life.” He added, “No way to improve a balance sheet.”
He called the often well-funded investors — often from places like the US and UK — part of the problem.
“For far too many families, the dream of owning a home is simply unattainable in today’s market. But that has to change.
“Young Canadians deserve the chance to build a future in their own home like their parents did before them.”
He added that “all Canadians deserve to have an affordable home” and that the then recently approved budget, which includes the recently passed law, gives us the tools to make a difference.”
The new guidance — which comes as the Bank of Canada, like the Federal Reserve, has frantically hiked interest rates to stem rampant inflation — says properties not in metropolitan areas like Vancouver, Ontario and Toronto would not subject to the ban.
“This generally means that communities with a core population of fewer than 10,000 people are not subject to the ban, while communities with a core population of more than 10,000 people are affected,” Western Canada’s leading law firm MLT told Aikins Time.
Over the past two years, major markets in these cities — in an effort to discourage investors from buying real estate rather than fighting Canadians — have imposed taxes on nonresidents and vacant homes.
With housing remaining largely unaffordable for the average citizen, countless developments in these areas are being sidelined due to lower demand.