Canada’s residential real estate market has long attracted foreign interest, thanks to its reputation for economic stability, strong property values, and international desirability. But with housing affordability top of mind for policymakers, major steps have been taken to cool demand—especially from non-residents. One of the most impactful measures is the Prohibition on the Purchase of Residential Property by Non-Canadians Act, often referred to as the foreign buyer ban, which has now been extended through January 1, 2027.

This extension changes the game for buyers, sellers, and investors alike. Whether you’re looking to purchase property, sell to an international party, or structure a compliant investment, it’s important to understand how the rules have evolved—and how they affect you.

What Is the Foreign Buyer Ban?

First enacted on January 1, 2023, the foreign buyer ban restricts the ability of non-Canadians—individuals who are neither Canadian citizens nor permanent residents—from purchasing residential property in certain areas of Canada.

The ban forms part of a broader strategy to curb speculation, cool overheated housing markets, and prioritize housing access for Canadian residents. With the extension to January 1, 2027, the legislation remains a central element of Canada’s housing affordability agenda.

Key Elements of the Law:

• Geographic Scope: Applies to residential properties located in Census Metropolitan Areas (CMAs) and Census Agglomerations (CAs)—typically the most in-demand urban and suburban locations across the country.
• Property Type: Targets residential dwellings, including detached homes, semi-detached homes, rowhouses, and condominium units. It does not apply to commercial or industrial properties.
• Exemptions Include:
• Certain temporary residents, such as international students and foreign workers, who meet specific criteria.
• Refugees and refugee claimants.
• Accredited diplomats and personnel of recognized international organizations.
• Penalties:
• A maximum fine of $10,000 for both the buyer and any party who knowingly facilitates a prohibited purchase.
• Courts may also order the forced sale of the property if it was acquired in violation of the Act.

Due to the law’s complexity, foreign individuals must obtain legal advice to fully understand their eligibility, risks, and options under the extended ban.

How the Ban Affects Real Estate Transactions in Canada

The foreign buyer ban has introduced both legal and practical challenges for real estate professionals, buyers, sellers, and investors. Its effects extend far beyond regulatory compliance and now shape how transactions are negotiated and executed.

1. Reduced Buyer Pool in Urban Markets

Cities like Toronto, Vancouver, and Montreal—already grappling with limited housing supply—have seen a contraction in foreign buyer participation. This shrinking pool of eligible buyers may dampen demand, potentially impact pricing trends, and influence negotiation leverage, especially in the luxury and pre-construction segments.

2. Sales Complications and Legal Liabilities 

Real estate agents, developers, and property owners must exercise caution when engaging with international prospects. Failure to properly vet a buyer’s residency status could result in:

• Nullified agreements of purchase and sale.
• Financial loss due to delayed closings or forced resale.
• Exposure to legal penalties under the Act.

This has increased the importance of compliance checks during the early stages of the sales process.

3. Enhanced Legal Due Diligence 

Real estate lawyers now play an even more critical role by:

• Verifying buyer eligibility based on immigration status and legal documentation.
• Drafting contracts with appropriate compliance clauses and indemnities.
• Advising on financing and title transfer risks when foreign entities are involved.

They also offer essential guidance to realtors, mortgage brokers, and developers—who may be implicated if found assisting in a prohibited transaction.

Strategic Investment Alternatives for Foreign Buyers

Despite the restrictions, the Canadian real estate market still presents opportunities for foreign investors who are willing to adjust their strategies.

1. Investing in Commercial or Mixed-Use Properties 

The ban applies only to residential real estate, so investors may pivot to:

• Commercial buildings such as office towers or retail plazas.
• Industrial properties, including warehouses or logistics centres.
• Mixed-use developments, provided the residential component does not dominate.

These sectors not only remain open to non-Canadians but may offer long-term stability and growth depending on location and use.

2. Structured Partnerships with Canadian Entities 

Foreign investors may form joint ventures or corporate partnerships with Canadian citizens, permanent residents, or registered corporations. While permissible, these arrangements must be carefully structured to:

• Avoid violating the anti-avoidance provisions of the Act.
• Ensure that the Canadian partner has legitimate control or interest.
• Comply with corporate, tax, and real estate laws at both federal and provincial levels.

Legal advice is essential to draft transparent, enforceable agreements that align with regulatory expectations.

3. Use of Trusts and Nominee Structures 

In some cases, a trust or nominee arrangement may be used to hold property on behalf of a Canadian individual or corporation. However, regulators are increasingly scrutinizing these vehicles, especially where beneficial ownership remains unclear. Misuse could result in serious legal consequences.

Legal Best Practices for Navigating the Ban

Whether you are a buyer, seller, developer, or investor, here are essential legal steps to ensure compliance:

• Obtain written verification of buyer residency or citizenship status.
• Amend purchase agreements to include clauses addressing the ban and possible remedies.
• Avoid informal arrangements or verbal agreements that may be construed as circumvention.
• Retain experienced real estate legal counsel from the outset of any cross-border transaction.

Looking Ahead: Compliance and Market Impacts Before 2027

The extension of the ban sends a strong signal that the Canadian government is prioritizing long-term housing affordability. Stakeholders should prepare for:

• Increased enforcement by regulatory bodies.
• Policy updates or additional restrictions as housing data evolves.
• Public scrutiny of both developers and high-profile transactions involving international actors.

Investors and sellers must stay informed and adaptive in this dynamic legal landscape. Real estate professionals should also consider continuing education or legal workshops to remain current on regulatory changes.

Moving Forward with Caution and Confidence

Canada’s extended foreign buyer ban marks a pivotal moment for the national real estate sector. While it introduces new legal obligations and investment limitations, it also offers a chance to reevaluate priorities and develop more sustainable, compliant strategies.

Whether you are an international investor, a developer marketing pre-construction units, or a seller navigating the complexities of cross-border transactions, early legal intervention can protect your interests and prevent costly mistakes.

Need guidance on how the foreign buyer ban impacts your transaction or investment plan? Our Real Estate Law team offers clear, strategic legal support—helping ensure your transactions remain compliant, transparent, and secure.