Canada’s recent housing legislation is making headlines; in an effort to cool off the Canada housing market and boost its housing supply, the government is restricting who can buy homes, including most foreigners.
While that may sound extreme, the country is looking for ways to protect its citizens from rapidly rising home prices. Understanding how this new legislation may affect employees who are relocating to Canada and need to secure housing is essential for employers and employees who are in this situation or who may consider a transfer in the near future.
What is the Budget Implementation Act?
The Budget Implementation Act legislation passed in August 2022. Included in this legislation is a new law called the Purchase of Residential Property by the Non-Canadians Act.
The housing market in Canada is extremely hot, and the demand for housing, coupled with rising prices, means many Canadian citizens are unable to purchase a home. In fact, over the last two years, Canadian home prices have increased by more than 50%. The new legislation, which takes effect on January 1, 2023, will be in effect for two years and stops most non-Canadians from purchasing homes during that period.
Certain permanent residents and temporary workers will be exempt from the Act subject to regulations that are not yet provided. Those regulations must be made public before the January 1st deadline.
The president of the Canadian Employee Relocation Council (CERC) is actively working with the government to obtain exemptions for relocation management companies (RMCs) that are not registered in Canada, along with Temporary Foreign Workers.
The mobility industry will be impacted by this change, and employee relocation options may suffer if exceptions are not made for employees who are coming to work in Canada through job transfers and international assignments. Relocation Management Companies that have offices in Canada currently do not have exemptions from this legislation, and the only exemption is for employees who are in Canada on work visas.
Will the Moratorium Solve the Canadian Housing Problem?
The moratorium is well-intentioned, but it is doubtful that the Purchase of Residential Property by Non-Canadians Act will have a consequential effect on the housing supply and prices in Canada. However, it will cause hardships for employees who are following all the guidelines of a Canadian relocation policy and want to buy a home in Canada.
Employees relocating to Canada will have more difficulty securing suitable housing for themselves and their families, and that may discourage them from accepting the relocation package. That, in turn, may cause hardships for companies that need workers to relocate and could add to shortages of workers in critical industries throughout the country.
Additionally, the change to the legislation runs counter to another Canadian policy objective, which is companies capitalizing on the relatively liberal immigration system Canada offers in order to attract high-quality talent. This is often at the expense of the U.S., as many of the best and the brightest are transferred to Canada for excellent jobs and high quality of life.
At TRC Global Mobility, we support the efforts of the Canadian Employee Relocation Council (CERC) and Worldwide ERC (WERC). These organizations are working hard to ensure the Canadian government recognizes the needs of global companies and their employees.
Relocation management companies support both the companies and their employees when transfers are needed. Without the ability to purchase homes in Canada, many employees may refuse transfer assignments, and relocation companies will be unable to operate in the interests of everyone involved.
Navigating International Relocation and the Canada Housing Market
From departure services to furniture leasing, we understand that an international move is extremely complicated. Many companies feel comfortable with a transfer between the U.S. and Canada because the countries share a border, but there are still logistical issues that must be considered.
If your company needs help assessing your global mobility policies in light of the current realities and changing times, learn more about international relocation trends and policies in this Global Mobility Policy whitepaper.