The Canadian real estate market has been a hot topic in recent years, with soaring housing prices and a surge in demand. To address these challenges, the Canadian government enacted the Prohibition on the Purchase of Residential Property by Non-Canadians Act. Let’s dive into the key details and implications of this legislation on the mobility industry.
In an effort to slow the rising cost of housing in Canada, the Canadian federal government passed the Prohibition on the Purchase of Residential Property by Non-Canadians Act, effective January 1, 2023. This act bans non-Canadians from buying residential property.
A “non-Canadian” includes companies not incorporated under Canadian federal or provincial laws. It also includes companies incorporated under Canadian law if they are not listed on a Canadian stock exchange and are controlled by a company incorporated outside Canada (such as a US company).
This act was scheduled to expire at the end of 2024, but the Canadian government is looking to extend it for an additional two years until January 1, 2027.
Relocation management companies deemed to be non-Canadian have not been able to acquire residential properties in Canada since January 1, 2023, with a few exceptions discussed below. Consequently, companies like Cartus are not able to provide Guaranteed Buyout Offer programs in Canada to most clients. Instead, home sale assistance in Canada is generally limited to Direct Reimbursement, which ensures that closing costs remain non-taxable for Canadian residents.
The ban does not apply to residential property located outside of a Census Metropolitan Area (CMA) or Census Agglomeration (CA). That means that foreign individuals, including relocation management companies, are allowed to purchase these “excluded residential properties.”
The ban also does not apply to clients who qualify under the Act as a Canadian entity.
Our passion for providing the highest-quality services to our clients and their relocating employees means that we will do our utmost to serve them. In this instance, we needed to adopt a different approach to the traditional timelines and services we offer to the majority of our clients. We are leaning into our network of supplier partners to develop and dispense alternative service options that comply with the prohibition while prioritizing assignee needs and cost efficiency.
These include:
Our dedication to finding effective, compliant services is a characteristic of who we are. We are currently working with our teams and clients to develop additional creative and agile approaches to relocation within this specific market. We look forward to spearheading the implementation of relocation services that comply with current and new market regulations and optimize the employee experience.
As this prohibition continues to shape the Canadian real estate landscape, prospective buyers, including foreign workers and the employers sending them to the location, must stay informed. Understanding the nuances of the legislation and seeking professional advice can help navigate the complexities of property acquisition during this period.
Cartus continues to monitor the situation and is working with our partners in the global mobility industry, including WERC® and Canadian ERC, to seek an exception from the legislation for employee relocation transactions. We will provide updates as further information becomes available.
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