A Canadian law banning foreigners from buying property in the country came into effect Sunday, as part of Prime Minister Justin Trudeau’s multipronged plan to tackle rapidly rising house prices.
Dubbed the Prohibition on the Purchase of Residential Property by Non-Canadians Act, the bill seeks to quell the nation’s housing crisis by banning all outsiders — particularly investors — from purchasing real estate in the 10 counties.
The guidance, passed by the House of Representatives in June, is a cornerstone of Trudeau’s proposal to cool speculation, which saw average home prices climb to an eye-watering $800,000 after the pandemic. The country’s housing market has yet to recover since then, partly due to limited supply and opportunistic investors.
As a result, frenzied bidding wars are now commonplace, with an increasing number of Canadians finding themselves displaced by historic home records – which are 38 percent higher than just three years ago.
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A Canadian law prohibiting foreigners from buying real estate in the country came into effect on Sunday
The bill, dubbed the Prohibition on the Purchase of Residential Property by Non-Canadians Act, as part of Prime Minister Justin Trudeau’s plan to tackle rapidly rising house prices
In a press release touting the law – which is only a two-year temporary measure – Housing Minister Ahmed Hussein reiterated how he and other Canadian officials supported the law.
“Because of this legislation,” Hussein said late last month before the bill was passed.
He added: “We are taking action to ensure that housing is owned by Canadians for the benefit of everyone living in this country.”
The campaign website for Trudeau’s party offered a similar statement regarding guidance, while also outlining the reasons for the recent volatility in the housing market.
“The desirability of Canadian homes attracts freeloaders, wealthy corporations and foreign investors,” the Liberal Party of Canada wrote ahead of the law’s enactment on Sunday.
‘This leads to a real problem of underused and vacant housing, unbridled speculation and skyrocketing prices. Homes are for people, not for investors.’
An increasing number of Canadians are being displaced by historic home highs – which are 38 percent higher than just three years ago
Trudeau echoed that sentiment in April at an event where he praised his signing of the bill earlier this month as part of the country’s budget proposal for the year.
During his speech, the 51-year-old prime minister – who narrowly won his third bid for the position in September – stated that the bill had been pushed through parliament.to make life more affordable for Canadians and grow our economy.”
Instead of property, the progressive – which has come under fire for strict lockdown measures during the Covi-19 pandemic that saw several small businesses go out of business – stated that the newly written plan ‘invests in people’.
“Making life more affordable for Canadians… has to start with addressing housing affordability,” Trudeau said of the $8.9 million budget, which was delayed months earlier by conservatives amid fears that the country would face even more economic challenges. would cause uncertainty.
“It’s a big problem for a lot of Canadians and it’s a big problem to solve,” the Liberal leader continued, addressing citizens in front of a dais emblazoned with the phrase “Make housing affordable.”
A construction crane stands still in Vancouver on the site of an office tower under construction last year. The Canada Mortgage and Housing Corporation reported that 3.5 million additional homes must be built by 2030 to achieve affordability for all Canadians
There is not one silver bullet that will solve everything. That’s why our plan has three main pillars,” Trudeau said, before outlining what his party hopes to achieve with the new guidelines.
‘The first is helping people save to buy a house; the second focuses on housing supply, to ensure we create more homes across the country; and the third ends the speculation that unnecessarily drives up house prices,” he said.
The three-time prime minister named Ontario’s Especially Hamilton, which, like countless cities across the country, has seen house prices rise.
The port city — located less than two hours across the border from Buffalo — has seen real estate costs rise 16.8 percent in two years, with the median home price now standing at $761,244 even after falling 8.9 percent. percent by 2022.
While addressing the crowd, Trudeau admitted that this phenomenon was happening “frankly across the country,” leaving the average Canadian in the lurch as investors who bought real estate before or in the early stages of the pandemic are making a profit .
“Canada needs more affordable housing,” Trudeau said at the time. “If Canadians work hard and save, they should be able to afford a house.
“Homes are for living in. To start a family and build a life in it.” he added, “No way to jack up a balance sheet.”
He cited the often entrenched investors – who often come from countries such as the US and UK – as part of the problem.
‘For far too many families, the dream of home ownership is simply out of reach in today’s market. But that has to change.
“Young Canadians deserve the chance to build a future in their own home, just as their parents did before them.”
He added that “all Canadians deserve to have affordable homes,” and that the then recently approved budget, which includes the recently passed law, gives us the resources to make a difference.”
That said, the new guidance — which comes as the Bank of Canada, like the Federal Reserve, has been frantically raising interest rates to address rampant inflation — states that properties not located in metropolitan hubs in places like Vancouver, Ontario and Toronto would not be subject to the ban.
“In general, this means that municipalities with a core population of less than 10,000 people will not be subject to the ban, while communities with a core population of more than 10,000 people will be affected,” said MLT Aikins, the leading law firm of the United States. Western Canada, at the time.
Over the past two years, major markets in those cities — in an effort to deter investors from picking up properties rather than struggling Canadians — have introduced taxes on non-residents and vacant homes.
Meanwhile, homes remain largely unaffordable for the average citizen, sidelining numerous construction projects in those areas due to reduced demand.