> "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.)

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.

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.

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.

> 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.

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

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

Reddit is not exactly an authoritative source....

But HN is?

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

Can you elaborate on some of the points the random redditor made that you think aren't valid?

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

Well-designed?! For whom? From 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.

Do you not think that the post sufficiently addressed this criticism? For example this point:

> "What about mortgage fraud/brampton mortgages, won't they simply do fraud like they've been doing?"

> - Interestingly, this legislation allows for an order forcing the house to be sold immediately. Unlike a fraudulent "Brampton mortgage", which creates a debt the person is likely to successfully pay and keep quiet about the fraud - this legislation creates a situation where the bank and its agents would lose out, so they have no incentive to help. Real Estate Agents similarly risk their commission being clawed back, loss of license, etc. In point of fact, if you sell a house to someone you could then report that person and walk away with the money, and refuse to pay closing costs to your real estate agent. It creates a one-sided unpredictable legal risk for which the realtor, banker, lawyer, all risk not being able to bill or recover money. It's a waste of their time.

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."

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.

> if the Minister and provincial superior court can be bothered.

I know that for immigration and citizenship cases, officers at the border are called minister's delegates in certain contexts: they do things that the law authorizes the minister of immigration to do.

It's not like the minister has to get personally involved. It just means the ministry is in charge of referring cases to the court, so they will create and office and hire a bunch of bureaucrats to do this.

Nobody suggested that the Minister had to be personally involved. The point remains that the only certain effect of the law is that every foreign purchase will incur a $10,000 fine. If the overworked courts deign to get involved, the property might have to be sold, again!

Given the government's storied, multilateral, multi-decade unwillingness to do anything about the housing crisis (many MPs and MPPs are landlords!), I just don't see this law as anything but a $10,000 cost of doing business.

> 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.

1. I sincerely doubt that the courts will let the law remain unenforced. Let's agree to disagree on that.

2. The reddit post goes into details (which I agree with) about how this law changes the incentives, so real estate agents, sellers, lawyers, etc. are unlikely to want to aid foreign nationals in circumventing it.

3. Selling is a punishment. Everyone gets fined, the house is sold, and the seller cannot get any of the upside from the sale. At best, they break even (minus the fine).

> Marginal note:Paragraph (1)(c)

> (2) Regulations made under paragraph (1)(c) must provide that no non-Canadian receive from the proceeds that results from a sale of a residential property ordered under section 7 more than the purchase price they paid for the residential property.

https://laws-lois.justice.gc.ca/eng/acts/P-25.2/page-1.html

> 1. I sincerely doubt that the courts will let the law remain unenforced. Let's agree to disagree on that.

Then you don't know Canadian enforcement very well. I've been a Canadian for 35 years and I can say with conviction that most laws around real estate or commercial corruption aren't enforced.

Almost all my Chinese friends who aren't already wealthy let overseas "investors" use their accounts to transfer 50k/y. They open an account, and allow a lawyer/banker to do transfers in their behalf. Then the lawyer transfers 50k in it, transfers it to their client, leaves 2-3k. There have been dozens of lawyers and accountants that were caught aiding in this scheme, but the fine is around 70k, so it's just the cost of doing business.

Depends on the province, but in Ontario, only a lawyer can convey property in the land registry. It might be difficult for a foreigner to buy in that case.

"Unenforced"? No, no -- the $10,000 fine will be collected. It's just the forced sale that might not occur if the superior courts are busy (and they are!), and if it does occur, the foreign nearly-buyer will be out $10,000. There's no need to encourage baseless Reddit speculation, just read the law itself -- I've linked it, you've linked it -- and reason about how the government will act based on the last 30 years of government (in)action.

Again, I don't agree with your cynicism. But even if you are cynical, consider this: if the government appears soft on real estate prices, they will lose the next election (which may be as early as this spring) to Pierre Poilievre.

...that's a really good point, actually. I am in fact so cynical that in light of this point, I think I'm going to go around loudly praising this bold new law from the wise Liberals.

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.

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.

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.