Last Updated on 6th September 2024
Many foreign nationals plan to purchase a primary residence, second home or rental property in Canada, taking advantage of the sustained appreciation in the Canadian real estate market or acquiring a house to live in as a long-term or permanent resident.
One of the potential complications is that the Canadian government has paused the rules that previously allowed expats to buy a home with very few restrictions. However, the Purchase of Residential Property by Non-Canadians Act, intended as a short-term measure to alleviate housing shortages, is currently expected to end on 31st December 2026.
Expats already living in Canada with permanent residency or dual citizenship can, of course, proceed with a purchase immediately. In contrast, other foreign nationals have plenty of time to review the places they might like to buy or create a detailed property purchase budget.
Updated Rules for Expat Property Acquisitions in Canada
The Act we’ve mentioned means that any non-Canadian person or corporation cannot buy a residential home. The rule does not apply to permanent residents or citizens and also excludes:
- Working adults who have worked within Canada and filed tax returns in at least three of the previous four years.
- International students, who are permitted to buy homes worth up to $500,000 (£291,475), provided they have lived in Canada for at least five years.
- Non-residents who are married to a Canadian citizen.
The definition of a residential property includes any home within an area defined by the Canadian census as a metropolitan area. That refers to any town, city or settlement with a population of 10,000 people or more.
Foreign nationals may be able to purchase more remote properties, such as lake houses or cottages, outside of the major cities. However, we recommend seeking independent advice to ensure any prospective purchase is permitted and carries no risk of a fine or enforced sale.
Average Property Purchase Costs in Canada
Like all other countries, the cost of a Canadian property may vary considerably depending on where you’d like to buy, with the highest average home prices in the largest cities.
You’ll also find a diverse range of options throughout Canada, from condos, townhouses and detached homes to bungalows, apartments, cottages, duplexes and row houses – what we would refer to as a terraced home in the UK.
Due to high demand and population density in the cities, most residential properties tend to be apartments, row houses or duplexes, with larger semi-detached and detached properties in the suburbs. However, Canadian houses also tend to be large by British standards, with an average house size of 181 square metres, compared to a far smaller 76 square metres in the UK.
Vancouver has one of the most buoyant and priciest Canadian property markets and is a multicultural city often regarded as one of the most liveable cities internationally. Montreal is equally attractive, with a thriving art and culture scene, but outside of the centre of the city, buyers can purchase a home almost double the size of the property their budgets would stretch to in Vancouver.
Toronto is another fantastic location and a finance, banking and technology hub. The heart of the city remains affluent with high prices per square metre, but the more expansive Greater Toronto Area offers plenty of options, with more generous family homes available.
As a rough guide, we’ve looked at the price per square metre across these and other cities for central homes and properties a little further out.
Additional Costs to Consider When Buying a Canadian Home
The costs associated with buying residential property in Canada don’t solely include the price of the property itself. We’d always recommend prospective buyers take the time to review legal fees and estate agent charges to ensure they have a sufficient budget.
Most foreign buyers will work with a real estate agent to steer them through the buying process, and the average cost is between 3% and 7% of the property price – although sellers tend to pay the bulk of the real estate agent’s fees.
Other costs that are largely covered by property buyers include:
- A home inspection fee. Depending on the property size, this costs between $300 and $1,000 (£175 to £583). An inspection is advisable since this will identify any issues or structural problems that could impact the price you are willing to pay.
- Legal fees usually cost between $900 and $2,000 (£525 to £1,166). A real estate lawyer will manage all the paperwork, verify that there are no outstanding claims on the property and file the change in home ownership.
- Land transfer tax depends on where you buy, with an average cost of 0.5% to 2.5% of the property value. This property tax is levied by the municipality, and you normally pay tax on a tiered basis, with the higher percentages applied to more expensive real estate acquisitions.
- New home warranties are obligatory in some provinces, including Quebec, British Columbia and Ontario. The warranty costs a fixed amount as a percentage of the property price – the developer pays the fee but then often rolls this up into the final amount payable.
Finally, you may need to budget for an appraisal fee if you are financing your property purchase with a mortgage. A Canadian bank, mortgage broker or lender will require an appraisal that confirms that the price paid is equivalent to the assessed market value.https://chasebuchanan.com/visa-routes-costs-moving-to-canada-from-the-uk/
Expats buying property in Canada with mortgage lending usually need a down payment of at least 5% of the purchase value. They may be asked to take out mortgage default insurance, a type of coverage issued by official housing bodies, at 2.8% to 4% of the property value, less the deposit paid.
For more information about moving to Canada, buying property in Canada, the legal processes and restrictions on foreign buyers, please get in touch with the Chase Buchanan team in Canada at your convenience.
*Information correct as at March 2024