Blow to British expats as Canada extends ban on buying houses

Justin Trudeau, the Canadian prime minister, has extended a ban on foreign nationals purchasing homes, in a blow to British expats.

Only foreigners who are asylum seekers, some international students and temporary workers will be permitted to buy residential property until 2027, Ottawa has said.

Thousands of Britons living in Canada could be hit by the moratorium, designed to stop houses falling into the hands of a “speculative financial asset class”, said Chrystia Freeland, Canada’s finance minister.

“By extending the foreign buyer ban, we will ensure houses are used as homes for Canadian families to live in and do not become a speculative financial asset class. The government is intent on using all possible tools to make housing more affordable for Canadians across the country,” she said.

Around 650,000 British expats currently live in Canada. Britons seeking to own a second home, or live in the country without permanent residency, will be caught out by the ban.

Those planning to move to Canada from the UK need to obtain citizenship or become a permanent resident to purchase property.

Buying a house and falling foul of the rules could result in a fine of up to C$10,000 (£5,890) and a compulsory order to sell the property.

It also applies to foreign commercial enterprises, as well as people who are not Canadian citizens or permanent residents. The ban was originally brought in on Jan 1 last year, after being agreed in 2022, and was due to expire at the start of 2025.

It will now be extended to January 2027, despite criticism that it has had little impact on house prices.

Tom Davidoff, associate professor at the University of British Columbia, said that it is “very hard to believe” the ban had been successful.

“In the most affordability-challenged markets, it’s very hard to believe there was a lot of impact because there were so few foreign buyers to begin with,” he said. The latest available figures from Canada’s national statistics agency, from 2021, show that prime markets in Toronto and Vancouver had relatively low foreign residential property ownership, with 2.6pc and 4.3pc respectively.

It comes as Canadians face high levels of immigration under the controversial prime minister’s leadership, with almost a million people estimated to arrive over the next two years, say government figures.

Canadian media previously reported that the government was warned by officials in 2022 that increasing immigration would probably make housing less affordable.

House prices surged 56pc between the end of 2019 and the summer of 2022, research by Oxford Economics shows, amid record arrivals from overseas. Rents have also gone up, by 8pc across 17 metropolitan areas, from C$ 1,250 to C$ 1,359 in the past 12 months.

Justin Trudeau has set a target of attracting 500,000 immigrants to Canada every year