Introduced at the beginning of 2023, the Foreign Buyer Ban was criticized by many as overly restrictive and counterintuitive concerning the federal government’s objective of alleviating price pressure on the real estate market. 

For commercial real estate investors looking to invest in the Canadian market, there’s some good news on the horizon. The Government of Canada has recently introduced amendments to the Prohibition on the Purchase of Residential Property by Non-Canadians Act, which could expand your investment opportunities in the country.

One of the most significant changes is the increase in the foreign control threshold for real estate investment trusts (REITs) from 3% to 10%. Previously, the legislation deemed an entity as foreign if non-Canadians owned 3% or more of it. However, developers across the country rightly found this threshold overly restrictive. The new threshold will provide greater flexibility to investors.

Additionally, the new amendment which is great news for multi-residentials investors is allowing non-Canadians to purchase residential property for the purpose of development. This exception was previously only applicable to publicly-traded corporations. The amendment means that developers will now be free to expand densification projects across Canada which is a step in the right direction for housing and rental supply. Some expansions or remodels that were also tantamount to the construction of a new building or a change of use, such as creating a new residential property, will now be allowed.

Another good news for the multi-residentials and the commercial real estate market as a whole is the fact that the ban no longer applies to vacant land zoned for residential use or mixed-use with residential, allowing non-Canadians to purchase them for any purpose. This change opens up new investment opportunities for commercial real estate investors who may be interested in developing land for residential or mixed-use properties.

A significant change is that work permit holders are now allowed to purchase a residential property if they have 183 days or more remaining on their permit and have not purchased more than one residential property. This change is excellent news for investors as it will add another layer of strength to the demand for residential and rental real estate. 

The amendments are part of the Government of Canada’s efforts to make housing more affordable for Canadians by targeting foreign money. The changes strike the right balance between ensuring that housing is used to house those living in Canada, rather than a speculative investment by foreign investors, while also providing greater flexibility to newcomers and businesses seeking to contribute to Canada.

If you’re a commercial real estate investor, these amendments could provide new investment opportunities in the Canadian market. With greater flexibility in the regulations, you may want to consider exploring new ventures in the residential and mixed-use sectors. As the amendments are effective immediately, you can start looking for investment opportunities right away.

However, it’s worth noting that even following the amendments, there are still professionals in the industry who have criticized the ban, believing it misses the mark in addressing the core factors causing a nationwide issue of housing affordability. Therefore, doing your due diligence and conducting thorough research or partnering with a professional is essential before making any investment decisions. Understanding the local real estate market and keeping up-to-date with the latest regulations will be essential to making informed investment decisions.

Recent amendments to the Prohibition on the Purchase of Residential Property by Non-Canadians Act offer some new opportunities for commercial real estate investors. With changes to the foreign control threshold, the ability to purchase residential property for development purposes, and the repeal of the ban on vacant land, the market is ripe for exploration. However, it’s essential to conduct thorough research and seek professional advice before making any investment decisions.