Canada Developers Push to Ease Foreign Buyer Restrictions

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VANCOUVER, Canadian property developers are urging federal and provincial governments to reconsider foreign buyer restrictions that have been in place for nearly a decade, citing their impact on the housing market and broader economy.

Nearly a decade ago, the federal and British Columbia governments introduced a foreign buyer tax aimed at limiting property speculation. The tax, initially 15%, rose to 20% under the NDP government. In January 2023, the federal government imposed a temporary ban on foreign property purchases, which was extended for three more years in January 2024.

Developers and industry advocates argue that the measures have slowed the pre-sale condo market, reducing investor activity and limiting housing supply. In a July 29 open letter addressed to Prime Minister Mark Carney, federal Housing Minister Gregor Robertson, B.C. Premier David Eby and other provincial officials, industry groups, requested exemptions for newly built homes or a reconsideration of the ban and taxes.

According to data cited in the letter, non-residents have accounted for a significant portion of condo purchases in major cities. In Vancouver, roughly 15% of newly built condos between 2016 and 2022 were purchased by non-residents, while Toronto saw nearly 11%. Non-residents also hold stakes in resale properties: 8.6% in Vancouver and 5.3% in Toronto.

Industry leaders emphasized the broader economic consequences. Neil Chrystal, president of Polygon, noted that housing construction is closely tied to long-term economic growth. “If you don’t have demand, builders won’t build the supply that will be needed in the future,” he said. Polygon has not actively marketed to foreign buyers but supports exemptions due to economic concerns.

Experts highlighted potential regulatory improvements if the market were to be reopened. Ron Usher, former general counsel for the Society of Notaries Public of B.C., emphasized the need for strict enforcement of the Land Owner Transparency Act, aimed at preventing hidden ownership, tax evasion, and potential money laundering. He recommended requiring proof that every property transaction is reported to the Canada Revenue Agency and that foreign buyers receive an Individual Tax Number.

Other developers, including Michael Geller and Ross McCredie, underscored structural challenges in the pre-sale financing system. Builders often need to pre-sell 70% of a project to secure construction funding, which has incentivized investor-driven developments that may not align with end-user demand.

Despite the debate, industry representatives stress the need for a coordinated government approach to housing and employment policy. Chrystal said developers face a “difficult spot” balancing current restrictions with future housing needs, while McCredie noted the importance of planning beyond high-cost urban cores.

As the discussion continues, policymakers will weigh economic growth, housing supply, and regulatory compliance in determining whether foreign buyer restrictions should be eased.