This article was authored by Barbara Jo Caruso, founder of Corporate Immigration Law Firm (CILF) with offices in Toronto and Ottawa, and a Founding Member of CILA.
There is a shortage of labour in Canada, and that means more immigrants are being welcomed than ever before. Last year was a record year for processing immigration applications, and in 2022, Canada welcomed a record-breaking 431,000 new permanent residents surpassing the record of 405,000 set in 2021. This number is expected to grow to half a million by 2025.
Historically, Canadians have feared immigrants stealing their jobs, but these days the Canadian public is concerned that newcomers are stealing their homes. Following the pandemic, there is a severe housing shortage.
The housing shortage has become an acute problem, primarily due to a significant lack of workers in construction and supporting trades roles and a lack of construction materials following the pandemic. The increase in both temporary and permanent newcomers has also fueled greater demand for housing and in turn resentment and fear of newcomers.
The Federal Government can address the housing shortage with sound immigration policy. Developing a policy to regularize those workers without status in Canada who were already working in construction trades would go a long way to ensuring Canada has a stable workforce to support the current and expected building boon. An immigration program for out of status construction workers exists, but it is only for workers in the Greater Toronto Area. This policy was launched in 2019, for 500 out-of-status workers only, and was doubled to 1000 workers early this year. Expanding this program to other regions in the country would not only stabilize the workforce in the construction and trade industry but would ensure these workers were able to work in a safe environment with proper health benefits. Undocumented workers are susceptible to workplace abuse and not eligible for health care benefits, putting them at greater risk in the event of a workplace injury.
Amendments to legislation are also needed to facilitate the selection of construction trade workers as temporary workers and new immigrants. Past immigration policies favour applicants with post-secondary education and strong English or French language skills, which most construction trade workers lack. A recent announcement by Immigration Refugee Citizenship Canada (“IRCC”) to target 82 occupations in five fields this summer will include trades, such as carpenters, plumbers, and contractors. To be eligible, candidates must have accumulated, within the past three years, at least six months of continuous work experience (in Canada or abroad) in one of the listed occupations. Although this is welcomed news, it is unlikely to provide immediate relief to the construction industry. The government should consider amending legislation to facilitate more temporary foreign workers in this industry. One suggestion would be to allow companies to apply for a labour market impact assessment (“LMIA”) without the need to advertise for certain construction trade occupations, and without caps on the number of workers per company based on the size of the company (similar to caps in the low wage LMIA program).
IRCC should also consider reducing the number of foreign students admitted to Canada as this category of temporary residents has ballooned since 2015, and many will not have a path to permanent residence in any event. The Federal Government seems to lack the political will to address many issues related to the foreign student program. The increase in the number of foreign students is putting stress on the rental market in communities with post-secondary education institutions, fueling unacceptable living conditions, higher costs and increased emotional stress for all students, domestic and foreign. In turn, there will be resentment towards foreign students and potentially an unwelcoming environment, thereby damaging the reputation of Canada’s foreign student program.
Instead of introducing sound immigration policy to address the housing shortage last year, the Government of Canada introduced and passed into law this year the Prohibition On the Purchase of Residential Property by Non-Canadians Act (“the Property Prohibition Act”), a new law supposedly to help make more homes affordable for people living in Canada. This law is nothing more than window dressing and has a serious negative implication for newcomers to Canada, in addition to seriously impeding the ability to attract talent to Canada to address labour shortages. The Property Prohibition Act came into force on January 1, 2023, and prevents non-Canadians (those that are neither Canadian citizens nor permanent residents of Canada) from buying residential property in Canada for two years, including preventing non-Canadians from using corporate structures to avoid the prohibition. The Property Prohibition Act defines residential property as buildings with three homes or less, as well as parts of buildings like a semi-detached houses or a condominium units. The law does not prohibit the purchase of larger buildings with multiple units. The Act includes a $10,000 fine for any non-Canadian or anyone who knowingly assists a non-Canadian and is convicted of violating the Property Prohibition Act. Further, if a court finds that a non-Canadian has done this, they may order the sale of the house.
Clearly, the Property Prohibition Act has the potential to have a chilling effect on the ability of Canadian businesses to attract foreign talent, especially when combined with provincial legislation which places a tax on the purchase of residential properties by foreign nationals. In Ontario, that tax is 25% of the value of the property, although a foreign national can apply for a tax rebate if they become a permanent resident within four years of making the purchase. The Regulations to the Act set out specific exceptions. These exemptions included properties in very rural locations, but unfortunately few foreign workers and immigrants settle in rural areas. Initially, when enacted on January 1, 2023, foreign workers that held a work permit or were authorized to work under section 186 of the Immigration Refugees Protection Regulations and had worked in Canada a minimum of three years within the four years preceding the year in which the purchase was made, filed income tax returns, and had not purchased more than one residential property were exempted.
Shortly after the Property Prohibition Act came into force, there were amendments to the Regulations to allow more flexibility in certain circumstances. Work permit holders are now allowed to purchase residential property, so long as they have more than 183 days or more of validity remaining on their work permit at the time of purchase, and they have not purchased more than one residential property. The initial requirements for tax filings and previous work experience in Canada were repealed. They are still subject to any applicable provincial tax.
A ban targeting foreign home buyers will not necessarily prevent speculation in real estate markets. Especially since non-residents only make up 2.2% of residential property owners in Ontario and 3.1% in British Columbia and only one in 10 Canadians owns an investment property with 23% intending to purchase one. Newcomers must live somewhere, so if they are prohibited from buying a home, they will rent a house or apartment and potentially take up a valuable living space for a Canadian who may not be able to afford to buy and must rent. This outcome is illogical and nonsensical. Rents in Canada have increased by 10% on average across Canada in the last year. This Property Prohibition Act is a classic example of populist policies making good politics but having undesirable consequences for businesses and consumers, and in turn the Canadian economy.
The Canadian Government needs to act quickly to better balance immigration levels and policies to align with labour and housing demands. Immigration levels and available housing need not be contradictions. If better aligned, we could see more homes built and less tension.
As a result of the prohibitions and taxes on foreign nationals seeking to buy a home in Canada, foreign nationals living in Canada temporarily, are focused on becoming permanent residents of Canada as soon as possible. Without permanent residence status, they may still be subject to the Property Prohibition Act and/or provincial taxes. Typically, most foreign nationals don’t qualify for permanent residence until they have worked in Canada for a Canadian company for at least one year. Further, there is no ability to apply for permanent residence at will, and instead applicants must be invited to apply for permanent residence by IRCC. Consequently, there is a great deal of uncertainty around qualifying and when to apply for permanent residence, which makes it difficult to provide newcomers with any assurance as to their eligibility to buy residential property in Canada without any restrictions. Foreign workers should seek legal advice from a Canadian lawyer with respect to eligibility for permanent residence soon after they arrive in Canada.
