March 27, 2023

In a major win for the Association and members, the federal government is amending some highly problematic parts of the Prohibition on the Purchase of Residential Property by Non-Canadians Act’s associated Regulations, which CHBA communicated to members about earlier this year. Through continuous advocacy by CHBA and BILD-GTA, given the extensive impact this Act is having in the GTA, the federal government announced today that they are creating an exception in the Regulations for the purchase of property for development purposes – the key amendment the Association was seeking in its advocacy. This exception allows for all entities, including those with some foreign ownership, to purchase residential property for the purpose of development, which will now enable all business entities in Canada, regardless of ownership structure, to contribute to increasing Canada’s housing supply.

Today’s announcement also repeals section 3(2) of the Regulations. This section prohibited Canadian entities with more than 3% foreign ownership from buying vacant land for residential development, thereby negatively impacting many Canadian-based business entities from contributing to much-needed housing supply for Canadians, which CHBA communicated. Vacant land zoned for residential and mixed use can now be purchased and used for any purpose by the purchaser, including residential development.

Other changes announced today include increasing the foreign ownership threshold to 10% from 3%, though this threshold will no longer be an issue for builders/developers/renovators looking to add to Canada’s housing supply given the previous changes listed above.

Since the initial Regulations were released (without the proper stakeholder engagement process) on December 21, 2022, to come into effect on January 1, 2023, CHBA has been in constant communication with the offices of the Housing Minister’s office, the Finance Minister’s office, and CMHC, to impress upon officials the need for an exemption for the home building industry. The Association is happy that these changes have been made in record time. Ordinarily, changes to Regulations take nine months to a year given all the due processes. This is a major victory for the industry.

The amendments to the Regulations should appear in the Canada Gazette in the next couple of weeks but come into force today. To read the government’s announcement, please view here.

February 7, 2023

The purpose of this page is to update members on the Association’s actions, and the Government of Canada response thus far, regarding the Prohibition of Residential Property by Non-Canadians Act and its subsequent Regulations. CHBA, along with BILD GTA (given the extensive impact this Act is having in the GTA), have been engaging extensively together with government officials and pushing for rapid resolution.

Background

On December 21, Regulations on the Prohibition of Residential Property by Non-Canadians Act were released, with an unusual process that skipped the pre-publication period (skipping an important critical stakeholder engagement period that would have enabled stakeholders to review the details of the regulations and provide feedback for corrections before they become law). Without this pre-publication period the Regulations came into force immediately on January 1, for a period of two years. Although the Act as previously announced and as touted was supposed to prevent the purchase of housing units by non-Canadians, the Association and other stakeholders were shocked to see the final Regulations as published prohibited Canadian companies with more than 3% foreign ownership from buying vacant land for residential development, or purchasing properties with less than four units on them (hence inhibiting assembling parcels of land for multi-unit construction). This also precludes buying farmland to develop communities. Given that the regulation also prevented purchase of mixed-use-zoned land, even commercial developers have been very negatively affected.

The Association engaged with officials immediately to seek a resolution, and in the process learned that this addition of land to the Regulations was aimed at preventing foreign buyers from changing from buying housing units to buying land to build on, but the major unintended consequence is that as worded this has also directly affected the entire development industry, specifically builder/developers with partial foreign ownership, preventing them from buying or assembling land for the development. Note that this will not affect companies that are 100% Canadian owned.

Action-to-Date

In addition to informing our membership of these new and unforeseen Regulations, the Association immediately engaged to seek rapid resolution with the office of the federal Housing Minister, the office of the Finance Minister, and the leadership at CMHC. These meetings  informed government officials of the massive negative impact these Regulations is having upon the home building industry not only from a housing supply perspective but also on the ability of builders and developers to continue doing business. Brought to their attention were specific examples provided to CHBA from across the country, and examples of the extreme impacts in the GTA as outlined directly by BILD GTA members.

Given the severity of the situation, the Association has been in continual  meetings with government officials since December 21, and has provided not only details on how this issue is affecting industry, but specific wording on how the Regulations should be rewritten to exempt the home building  and development industry in Canada from the Act.

Throughout our engagement, the Association has underscored the need for immediate action to help quell the very problematic situation in which many of our members find themselves, which is causing development to stall, important development deals to fall through, and housing supply actions to be delayed or completely derailed.

Reaction from Government

The meetings with government officials have been productive, with the Association’s messages being well received, as the government has a stated priority of increasing housing supply and, to do so, doubling housing production. Clearly these Regulations inadvertently run counter to increasing housing supply. In these discussions, the Association has been assured of the government’s commitment to housing supply and hence that they are committed to addressing this unintended consequence on an accelerated timeline.

Accordingly, it is the Association’s understanding that the Government is planning to go for an accelerated revision of the Regulations through the Treasury Board process. The exact timing of that process cannot be provided at this time, other than to say that the Association is aware that there is extensive work going on with government officials on the Regulations both in terms of process for revision and in terms of wording.

The Association will continue to push for full resolution on his issue and provide updates to the membership as they come. As the government issues formal notices on this issue, we will share both the notices and our assessment.  It is expected that there will indeed be a resolution to the situation, but every day between now and that resolution is very problematic for industry, and housing supply—we will continue to impress on officials the magnitude of this problem and the need for resolution as rapidly as possible.