The ban means people living overseas cannot buy residential property. It also extends to foreign companies, as well as Canadian private companies where more than 10% is foreign-owned. It was first introduced by the Justin Trudeau-led government with the remit to help ‘stabilize’ the housing market.
While the ban was initially set to last two years, it was extended by an additional two in February 2024. Under Mark Carney’s current tenure as Prime Minister, however, most analysts and economists don’t expect the ban to be extended again in its current form. We’re going to dig into the ban and what might come next.
Why is there a foreign buyer ban?
When this legislation was first developed the Canadian housing market was in a very different place to today. In February 2022 property prices had increased by 21% year-on-year, leading to them peaking at an average of $816,000. Transactions also rose during the pandemic years, as they increased to a record 127,312 in Toronto in 2021, up from 82,628 in 2018.
The growth of foreign investors in Toronto and Vancouver had been a contentious issue for years, and there was a growing narrative that Canadians were being priced out of their own country’s housing markets. Indeed, in 2016 the National Bank of Canada estimated that Chinese investors accounted for an eye-watering $12.7 billion of sales in Vancouver in 2015, one third of the overall total.
Whether foreign buyers were actually to blame for Canada’s overheated housing markets is another matter, as by 2022 non-residents owned 4.2% of residential properties in Vancouver and 3% in the Greater Toronto Area. Whether this represents a big enough proportion to overheat the housing market is debatable.
Exemptions to the foreign buyer ban
The ban doesn’t apply to all foreigners. Many who want to live and work in Canada are exempt, including::
- Permanent residents
- Temporary residents, provided they have 183 valid days left on their work permit
- Registered members of indigenous groups under the Indian Act
- Refugees and protected individuals under the Immigration and Refugee Protection Act
- Spouses or partners buying jointly with someone who is eligible
- Foreign state representatives and official international organizations
- International students, provided they enrolled at a designated learning institution, filed five years of tax returns in Canada, have been present in the country for at least 244 days of those years, and for property worth less than $500,000
Certain land and development types are also exempt from the ban:
- Properties with four or more units
- Vacant land zoned for residential or mixed-use containing no buildings
- Homes outside major centres, with populations in the town, municipality or rural area of less than 10,000
- Residential property purchased for development
A word of warning: If you aren’t exempt and still buy property as a foreign national before the ban ends you could be fined up to $10,000 and the property could be sold via court order.
Has the foreign buyer ban been successful?
Since the act was introduced, both transactions and property prices cooled down. The government argued back in February 2024 that the policy helped make housing more affordable for Canadians.
That said, house prices are far from ‘stabilizing.’ They’ve fallen by around 20% since February 2022, which creates new problems.
Such dramatic declines mean that some people have fallen into negative equity, which means that the size of their mortgage loans are larger than the value of their homes. In such a situation, it’s difficult to sell and move without losing out financially, and switching mortgage providers can be tricky.
Wider economic factors also cooled down the market in the past few years.
The dramatic house price gains during the pandemic, and subsequent pullback, coincide with Canada’s policy interest rate being at just 0.25% between March 2020 to March 2022. The rate incrementally rose to 5% by July 2025, as the Bank of Canada was forced to raise the national interest rate to keep a lid on inflation.
Interest rate changes made mortgages more expensive, which blocked some new buyers from being able to get on the housing ladder. It also became more expensive for mortgage holders to refinance. As such, demand—and therefore transactions and property prices—fell.
While the ban may have played a role, higher interest rates are likely to have had a far bigger impact in cooling down the market.
A transitional time
Mark Carney’s government now has the opportunity to replace the foreign buyer ban with something new, or let it expire without a replacement.
