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If you think this law will be easy to sidestep, please read this post first: https://old.reddit.com/r/canadahousing/comments/zz92li/prohibition_on_the_purchase

If you think this law will be easy to sidestep, please read this post first: https://old.reddit.com/r/canadahousing/comments/zz92li/prohibition_on_the_purchase_of_residential/ https://old.reddit.com/r/canadahousing/comments/zz92li/prohi... It appears that the law is well-designed to avoid such abuses and loopholes. Relevant xkcd: https://xkcd.com/1494/ https://xkcd.com/1494/

rippercushions 4y ago
> "The ban doesn't apply to properties with 4 units or more" - good. If the goal is to allow single family homes and duplexes, condos, etc. to drop in price, it's providing aid in the right place. The goal wasn't to make life easier for people buying investment properties. This seems like a massive gap though, and the counterargument doesn't make sense. Surely high-density housing is (should be) cheaper than the alternatives, and provides fine homes for many people who can't afford/don't want a suburban single family home with all the expenses that entails? (Car, maintenance, etc.)
- sgerenser 4y ago
  It sounds like the exemption is referencing entire buildings (e.g. apartment complexes) sold as one property. Not individual condos, etc. which would still be subject despite being in a building of >4 units.
- HWR_14 4y ago
  Someone who buys a single family home is depriving a family of the ability to own a home. A 4+ unit complex is unlikely to fall into the same situation. Those are often rented out. You're right that it might prevent owned condos from forming instead of apartments, but the only thing that gap allows is the sale of an entire complex, and the only thing it prevents is conversion of new apartment buildings to condos. Once they are condos, a foreign investor would need to buy them all at the same time.
  - kelnos 4y ago
    I think there's more to it, though. If landlords or management companies are competing to buy a 4+ unit building, that having more potential buyers (foreign buyers) will tend to make the final purchase price higher than it would have been if there'd only been local buyers, regardless of who ends up with the winning bid. And certainly the higher cost of purchase will influence the amount the new owner charges tenants to live there.
    - deleted 4y ago
      [deleted]
    - deleted 4y ago
      [deleted]
    - HWR_14 4y ago
      > certainly the higher cost of purchase will influence the amount the new owner charges tenants to live there. I don't think it will hurt tenants if their building sells for more money, unless there are any legal limitations based on sale price of a building with regard to raising the rents. But just market forces shouldn't really react at all.
ars 4y ago
It also appears to ban Canadian REIT's. Wonder how they are going to deal with the fallout from that.
- sgerenser 4y ago
  Don’t most REITs own either multi family or commercial properties, which are exempt from this law?
Drunk_Engineer 4y ago
Reddit is not exactly an authoritative source....
- fknorangesite 4y ago
  But HN is?
beyond_based 4y ago
This will be easy to side-step as it has been done all along now. Linking a random redditors interpretation is absolutely meaningless.
- ShaunK 4y ago
  Can you elaborate on some of the points the random redditor made that you think aren't valid?
  - vehementi 4y ago
    They're mostly arguing that it's dangerous to buy because transactions could be rolled back... but nobody in the chain has interest in doing that
revolvingocelot 4y ago
Well-designed?! For who? From the actual law, at https://laws-lois.justice.gc.ca/eng/acts/P-25.2/page-1.html https://laws-lois.justice.gc.ca/eng/acts/P-25.2/page-1.html: >Offence >6 (1) Every non-Canadian that contravenes section 4 and every person or entity that counsels, induces, aids or abets or attempts to counsel, induce, aid or abet a non-Canadian to purchase, directly or indirectly, any residential property knowing that the non-Canadian is prohibited under this Act from purchasing the residential property is guilty of an offence and liable on summary conviction to a fine of not more than $10,000. Emphasis mine. Eh, who cares? 10 grand isn't anything when held up against the average Canadian house price. And, yes, it's 10 grand from each involved party, but that's it. Sure, there's some language later on which allows a province's superior court to order that the house be sold. Be sold. What a punishment! And unless it's some massive televised case, the superior courts don't have time for that. This should be seen more as the Canadian government getting their cut.
- JumpCrisscross 4y ago
  It's a short law. Right after the section you quote is this: "If a non-Canadian is convicted of having contravened section 4, the superior court of the province in which the residential property to which the contravention relates is situated may, on application of the Minister, order the residential property to be sold in the prescribed manner and under prescribed conditions."
  - revolvingocelot 4y ago
    Mine was a short comment, and I actually address the point you raise, but I'll recapitulate it. Namely, if one is a foreigner caught buying a Canadian residential property, one is certain to pay $10,000, but may be forced to sell it, if the Minister and provincial superior court can be bothered. IANAL, but between the two sections we've excerpted, and the already-posted, short law, it doesn't seem particularly well-designed, except as a temporary budgetary boost to the government.
    - smnrchrds 4y ago
givemeethekeys 4y ago
Wouldn't the following still work? Step 1: Create a Canadian company. Own 100% of its shares. Step 2: Buy property in all-cash transactions. Step 3: Enjoy ownership as a foreign buyer.
- smnrchrds 4y ago
  No, it won't. Foreign entity cannot have interest in Canadian homes. Owning the company that owns the home is having interest, thus is covered by the ban. This is explained in the link.
- NoboruWataya 4y ago
  I don't know about this ban specifically, but most regulations these days are sophisticated enough not to be bypassed with a simple foreign-owned subsidiary. No doubt there will be ways to structure around the ban, but I would be surprised if such a simple structure were to work.

rippercushions 4y ago

> "The ban doesn't apply to properties with 4 units or more" - good. If the goal is to allow single family homes and duplexes, condos, etc. to drop in price, it's providing aid in the right place. The goal wasn't to make life easier for people buying investment properties. This seems like a massive gap though, and the counterargument doesn't make sense. Surely high-density housing is (should be) cheaper than the alternatives, and provides fine homes for many people who can't afford/don't want a suburban single family home with all the expenses that entails? (Car, maintenance, etc.)

sgerenser 4y ago
It sounds like the exemption is referencing entire buildings (e.g. apartment complexes) sold as one property. Not individual condos, etc. which would still be subject despite being in a building of >4 units.
HWR_14 4y ago
Someone who buys a single family home is depriving a family of the ability to own a home. A 4+ unit complex is unlikely to fall into the same situation. Those are often rented out. You're right that it might prevent owned condos from forming instead of apartments, but the only thing that gap allows is the sale of an entire complex, and the only thing it prevents is conversion of new apartment buildings to condos. Once they are condos, a foreign investor would need to buy them all at the same time.
- kelnos 4y ago
  I think there's more to it, though. If landlords or management companies are competing to buy a 4+ unit building, that having more potential buyers (foreign buyers) will tend to make the final purchase price higher than it would have been if there'd only been local buyers, regardless of who ends up with the winning bid. And certainly the higher cost of purchase will influence the amount the new owner charges tenants to live there.
  - deleted 4y ago
    [deleted]
  - deleted 4y ago
    [deleted]
  - HWR_14 4y ago
    > certainly the higher cost of purchase will influence the amount the new owner charges tenants to live there. I don't think it will hurt tenants if their building sells for more money, unless there are any legal limitations based on sale price of a building with regard to raising the rents. But just market forces shouldn't really react at all.

ars 4y ago

It also appears to ban Canadian REIT's. Wonder how they are going to deal with the fallout from that.

sgerenser 4y ago
Don’t most REITs own either multi family or commercial properties, which are exempt from this law?

Drunk_Engineer 4y ago

Reddit is not exactly an authoritative source....

fknorangesite 4y ago
But HN is?

beyond_based 4y ago

This will be easy to side-step as it has been done all along now. Linking a random redditors interpretation is absolutely meaningless.

ShaunK 4y ago
Can you elaborate on some of the points the random redditor made that you think aren't valid?
- vehementi 4y ago
  They're mostly arguing that it's dangerous to buy because transactions could be rolled back... but nobody in the chain has interest in doing that

revolvingocelot 4y ago

Well-designed?! For who? From the actual law, at https://laws-lois.justice.gc.ca/eng/acts/P-25.2/page-1.html https://laws-lois.justice.gc.ca/eng/acts/P-25.2/page-1.html: >Offence >6 (1) Every non-Canadian that contravenes section 4 and every person or entity that counsels, induces, aids or abets or attempts to counsel, induce, aid or abet a non-Canadian to purchase, directly or indirectly, any residential property knowing that the non-Canadian is prohibited under this Act from purchasing the residential property is guilty of an offence and liable on summary conviction to a fine of not more than $10,000. Emphasis mine. Eh, who cares? 10 grand isn't anything when held up against the average Canadian house price. And, yes, it's 10 grand from each involved party, but that's it. Sure, there's some language later on which allows a province's superior court to order that the house be sold. Be sold. What a punishment! And unless it's some massive televised case, the superior courts don't have time for that. This should be seen more as the Canadian government getting their cut.

JumpCrisscross 4y ago
It's a short law. Right after the section you quote is this: "If a non-Canadian is convicted of having contravened section 4, the superior court of the province in which the residential property to which the contravention relates is situated may, on application of the Minister, order the residential property to be sold in the prescribed manner and under prescribed conditions."
- revolvingocelot 4y ago
  Mine was a short comment, and I actually address the point you raise, but I'll recapitulate it. Namely, if one is a foreigner caught buying a Canadian residential property, one is certain to pay $10,000, but may be forced to sell it, if the Minister and provincial superior court can be bothered. IANAL, but between the two sections we've excerpted, and the already-posted, short law, it doesn't seem particularly well-designed, except as a temporary budgetary boost to the government.
  - smnrchrds 4y ago

givemeethekeys 4y ago

Wouldn't the following still work? Step 1: Create a Canadian company. Own 100% of its shares. Step 2: Buy property in all-cash transactions. Step 3: Enjoy ownership as a foreign buyer.

smnrchrds 4y ago
No, it won't. Foreign entity cannot have interest in Canadian homes. Owning the company that owns the home is having interest, thus is covered by the ban. This is explained in the link.
NoboruWataya 4y ago
I don't know about this ban specifically, but most regulations these days are sophisticated enough not to be bypassed with a simple foreign-owned subsidiary. No doubt there will be ways to structure around the ban, but I would be surprised if such a simple structure were to work.