As soon as he graduated from school, Tiago Aragao set out to make home ownership a reality for him and his wife.
Having completed a two-year degree in new media production and design from the Southern Alberta Institute of Technology, the 37-year-old Calgary resident has been aiming to save as much as he can for almost three years to one day be in a position to buy a home for his family.
“We’ve almost decided on a house. We were looking in December for a few different places and we were planning to move this year because my lease is up,” Aragao, who is from Brazil, told CTVNews.ca in a phone interview Saturday.
But with the federal government’s ban on foreign home buyers now in place, Aragao believes he and many other skilled workers who planned to stay in Canada are now “forgotten.”
“For us, it’s a matter of waiting and continuing to work until we become permanent residents,” he said. “But it’s something that also takes a long time to happen.”
Canada’s foreign homebuyer ban, which came into effect on Jan. 1, prohibits individuals and businesses from outside Canada from buying residential property in the country.
The ban will remain in place for two years and its purpose, as described by Canada Mortgage and Housing Corp. (CMHC), is to “make homes more affordable” by cracking down on foreign investment.
Those found to be in violation of the ban, including anyone who knowingly assists a non-Canadian in making a purchase, can be fined up to $10,000 and may be required to sell the purchased property.
Federal Housing Minister Ahmed Hussen said in a news release on December 21, 2022: “Homes should not be commodities. Homes are meant to be lived in, a place where families can put down roots, make memories and build a life together.”
Under the regulations, international students, those with temporary work permits and refugee applicants can be exempted from the ban. But Aragao believes the exemption criteria for student and work permit holders is too restrictive.
Foreign homebuyer rules state that work permit holders like Aragao must have worked full-time and filed income tax returns for at least three of the past four years.
But given that work hours for international students were previously limited to 20 hours a week, Aragao and other recent graduates who have work permits would not be able to fulfill the three-year full-time work requirement.
For international students to qualify for the exemption, they must have filed income tax returns for five years prior to the purchase and be physically present in Canada for at least 244 days in each of those years. The purchase price for a property also cannot exceed $500,000.
Unless a student goes on to earn a four-year degree and then pursue a master’s degree, Aragao doesn’t see how most people could be a student for five years or more and still qualify for the foreign homebuyer exemption.
“The thing is, it doesn’t make sense,” Aragao said. “So I came here, studied for two years at a public institution, and there’s no way I’ve been applying for five years.”
“So I just feel that those two exceptions are very difficult to meet the minimum requirements,” he added.
Housing supply and affordability continue to be major hurdles for anyone looking to buy a home in Canada, with prices rising during much of the COVID-19 pandemic before falling slightly as interest rates rise.
While the hope is that curbing foreign investment could open up supply, a 2017 CMHC report found that foreign buyers own a small percentage of all residential properties in cities like Toronto and Vancouver.
Diana Mock, an associate professor of real estate, finance and economics at Western University, wrote recently that non-residents, according to data from the Canadian Housing Statistics Program, owned only about two to six percent of residential properties in 2020.
“The law is more of a political gesture than an effective tool,” Mock wrote, although along with rising interest rates, the country’s “overheated housing market” will cool in the short term.
The British Columbia Real Estate Association (BCREA) in November 2022 said it was concerned the policy would “create barriers to home ownership for newcomers and could hinder Canada’s ability to attract immigrants.”
Canada accepted a record number of immigrants – 431,645 – in 2022 and plans to bring in 465,000 new permanent residents this year.
“Even if a person is not a resident of Canada, they can still contribute to Canada’s economy and communities,” BCREA said.
Aragao is nearing the end of the first year of his three-year work permit and hopes to qualify for express entry for permanent residency.
Although he and his wife plan to continue renting, Aragao said he would like to have a process where people like him can prove they don’t want to buy a home just to make money.
“Sometimes waiting isn’t very easy when you’re not too young,” he said.
With files from CTVNews.ca producer Jennifer Ferreira, CTV News Parliamentary Bureau writer and producer Spencer Van Dyke and The Canadian Press
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