Foreign-buyer ban threatens new multi-family housing
March 6, 2023
Grosvenor Brentwood rendering. | Grosvenor Group
British-based Grosvenor Group, which has built and financed thousands of homes in Canada over the past 70 years, is currently developing a large-scale project in Burnaby, B.C., that will deliver 450 below-market rental homes and 2,100 market rental units into a market starved for rental housing.
But, had the federal government’s two-year ban on foreign homebuyers been in effect in 2022 when Grosvenor was doing the land assembly, the project would never have started.
“We would have been prohibited from making this contribution to the housing supply,” said Grosvenor Americas CFO Graham Drexel.
The Prohibition on the Purchase of Residential Property by Non-Canadians Act, which came into force January 1, 2023, is playing havoc with residential real estate markets, industry spokesmen say.
Meant to make Canadian housing more affordable, it threatens to do the exact opposite according to critics.
The legislation expanded in scope after the concept was first floated early in 2022.
The law’s definition of residential property now includes land that is zoned for residential use or mixed use, which covers huge swaths of commercial land across Canada, including nearly all urban real estate.
“To date, the foreign-buyer ban has not impacted our ability to acquire land for future development of rental housing,” Drexel said. “However, if amendments to the currently drafted regulations are not made, it will absolutely impact our ability.”
The Canadian Home Builders' Association (CHBA) is among those calling on the federal government and Canada Mortgage and Housing Corp. to change regulations within the foreign buyer ban they say work against building more housing supply.
“We've tried to say, ‘Hey, this is a big problem.’ It's not just a question of before it comes into law, it has become law,” CHBA CEO Kevin Lee told Glacier Media.
In a prepared statement, a spokesperson from the Office of the Minister of Housing and Diversity and Inclusion said the federal government is closely monitoring the implementation and impact of the ban across Canada. "We will continue to engage with stakeholders as we consider potential additional steps to ensure this measure does not have unintended impacts on communities," the statement said.