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.