Everything about real estate in Canada for citizens of other countries. What is needed to complete the transaction? What types of objects are there? Is it possible to obtain citizenship in Canada when buying a home?

Purchasing real estate in Canada is not only a profitable investment, but also an opportunity to begin the naturalization process, which allows you to obtain Canadian citizenship in 4 years.

Canada has an open door policy for foreigners wishing to buy property, and non-residents have the same property rights as citizens. In 2017, the Ontario government introduced a 15% non-resident speculation tax (NRST) on home purchases in the Greater Golden Horseshoe area of ​​Toronto by people who are not permanent residents of Canada. Therefore, when planning a purchase, it is worth considering not only the characteristics of the type of property, but also its location.

Why do foreigners choose real estate in Canada?

Canada is attractive from an economic, environmental and comfort point of view for many migrants. Foreigners purchase apartments or houses for living and renting out. Every foreigner can buy residential or commercial real estate in Canada anywhere except in tourist and protected areas. The very fact of purchasing real estate does not provide privileges in obtaining a Canadian residence permit , permanent residence or citizenship. At the same time, the demand for apartments and houses for immigrants in Canada is of great interest as an opportunity to easily obtain a visitor visa and the right to stay in the country for up to 6 months every year.

What types of real estate exist in Canada?

There are 3 main types of Canadian real estate, each of which has its own subcategories:

  1. Commercial real estate – retail premises, offices, industrial buildings, multi-family houses.
  2. Residential – Single Family Home, Seasonal Rental, Small Multi-Family, Fix and Flip, Section 8 Rentals.
  3. Land – a plot for commercial development, a plot for residential construction, a plot for agriculture, a plot for mining.

Commercial Investment Categories

Industrial premises are of the following types:

  1. A regional shopping center is a large premises, usually located outside the city and intended for wholesale and retail trade and warehouse space.
  2. A community center is a shopping area, usually combining 3 boxes, designed to accommodate large supermarkets, like Walmart.
  3. Shopping Row – a strip of shops, hairdressers, restaurants, cafes.
  4. A separate premises – a gas station, bank or clinic.

Classes of office premises:

  1. Class A – buildings with a high level of finishing in the technical and financial parts of the city. Rents are higher than average as these buildings have an element of prestige.
  2. Class B is the most common type of property on good and stable sites and has the highest level of demand in most markets. This Class A property is not considered to compete with the previous type of premises.
  3. Class C – premises that are outdated in form and function, located in remote areas of the city; housing rents are below market prices; tenants can be difficult to find and retain.
  4. Medical office is a specialized subcategory intended for tenants working in the medical field.

Industrial real estate:

  1. Heavy Industrial – Facilities are designed for basic product manufacturing and must be equipped with industrial tools such as cranes, specialized welding equipment, chemical processing and painting areas. They are tailored to the individual needs of users.
  2. Assembly – enterprises that do not manufacture components, but assemble and package them for transportation or storage. The zoning process for them is usually less strict than for heavy industries.
  3. Warehouse – premises are usually located near major transport corridors and are designed for storing products. They include loading bays for semi-trailer access, have high ceilings, concrete floors and consist primarily of open space. Warehouse premises can be combined with office premises.

Residential Properties:

  1. A multi-family house is a high-rise building, usually more than 9 floors, built exclusively in large cities.
  2. Mid-rise projects are buildings of 5-9 floors, usually built in urban areas.
  3. Garden Style – Common apartment-style projects in suburban and urban areas typically do not exceed 3 floors.
  4. 4plex are smaller buildings with fewer amenities than garden style projects. Usually it is 1-2 floors with stairs leading to the top floor. The 4plex concept is often referred to as “walking around”.
  5. Manufactured housing community – so-called mobile homes. The owners of these projects usually rent out a finished house with a plot.
  6. Special project housing – student housing, social dormitories for families and individuals, as well as rehabilitation premises.

Types of land real estate:

  1. Commercial land is a site acquired for the purpose of developing a commercial center. The project implementation process includes working with architects to implement plans and local authorities to ensure proper zoning of premises.
  2. Residential land is a site in settled areas or outside residential areas that can be converted from agricultural land or other undeveloped land.
  3. Land for agriculture is large shares that are usually purchased for rent to farmers.
  4. Mining land is an area containing valuable deposits of minerals, oil and gas.

Buying land in Canada is profitable: purchasing agricultural land is often an excellent way to buy a lot of land and still receive income in the form of fees from the farmer. There are also tax incentives from the government for farming. Entrepreneurs involved in agriculture, when paying taxes, have the right to average income over a five-year period in order to protect their business from sharp fluctuations in income.

Leasing mineral rights can provide a stable income with long-term ownership of the site. This is a great multi-generational option that allows for decades of cash flow. When the mineral resources run out, the site is used for commercial or residential development. Investments in residential real estate also have their own characteristics and provide the opportunity to earn:

  1. Renting a single-family home is the most common form of real estate investment. These can be condominiums (buildings that are jointly owned), apartments in city high-rises, or single-family country houses. You can manage the rental yourself or enter into an agreement with a property management company. The minimum rental period is usually 12 months.
  2. Section 8 Tenancy – The property is typical single family occupancy with one exception. The owner applies and their premises are specifically designated as a Housing and Community Development Act approved home . Renters of such properties have low or no income, and the government reimburses all or part of the monthly rent.
  3. Vacation rentals are any single-family dwelling that is fully furnished and available for short-term rentals. Such projects work best in beach areas near bodies of water and large tourist and entertainment areas.
  4. Fix and Flip – This form of investment seems useful, simple and profitable, but can be fraught with problems. The concept of “buy and sell” is to purchase a property for less than its actual value, increase the price through upgrades and renovations, and sell for a profit within a short period of time. Risks arise from unexpected repair costs, misunderstandings of post-optimization costs, or rapid and unexpected changes in overall market conditions.

Which region should I choose to buy a home?

The Canadian real estate market is diverse across the country, from the coast to the prairies and popular urban centers. The Prairies offer the most affordable housing in Canada, and apartments there can be purchased for 200,000 USD, which is 14,863,200 in rubles. Canadian brokerage Zoocasa has released a report using data from the Canadian Real Estate Association that analyzes people’s after-tax income across 15 regions. The five most affordable cities for home buyers are:

  1. Saskatoon ranks first with an average down payment of $8,475 and a local annual income of $36,930. This means that residents will have to save 2.8 months to buy a property.
  2. Regina comes in second with a down payment of $8,965, which would take 2.8 months to come up with funds based on an annual income of $38,768.
  3. Edmonton comes in third with apartments priced at $183,800 with a down payment of just $9,190. Since Edmonton locals earn more than those in Regina or Saskatoon (about $42,360), it will take them less time to save for real estate, approximately 2.6 months.
  4. In fourth place is Moncton, North Carolina, with an average down payment of $10,120.
  5. Winnipeg takes fifth place with a down payment of $11,480 for home buyers.

Top 5 regions popular among foreigners in Canada for purchasing real estate:

  1. Alberta. The province has developed mineral extraction, including oil, so foreign investors are primarily interested in buying land. The provincial capital of Calgary is attracting more migrants thanks to the Alberta Immigrant Nominee Program (AINP), which nominates people for permanent residence in Alberta. Candidates must have the skills to fill job shortages or plan investments and start a business.
  2. British Columbia. There is a provincial nominee program BC PNP (BC Provincial Nominee Program) for in-demand foreign workers and experienced entrepreneurs. One of the largest cities in the province, Vancouver, attracts tourists and is profitable for investing in real estate for subsequent rental.
  3. Ontario. Foreigners are most attracted to Oakville as the best place to live due to its strong economy, low crime rate and optimal climate, its proximity to Toronto (31 km) and the prospect of investment in office real estate. The cities of Kitchener, Ottawa and Toronto are also favorable for the purchase of commercial and residential real estate for personal use and for rental property. The province has an immigration program called OINP (Ontario Immigrant Nominee Program), which makes it possible to move to Canada as a sought-after specialist.
  4. Saskatchewan. The province is famous for its developed agriculture, therefore, by purchasing land in this region, you can make money on farm leases. Saskatchewan’s provincial immigration program SINP (Saskatchewan Immigrant Nominee Program) annually helps hundreds of in-demand professionals or businessmen immigrate by obtaining a provincial certificate that speeds up the process of obtaining a residence permit. The province’s largest cities are Regina and Sastkatoon, and most migrants head here to buy land in the surrounding area.
  5. Quebec. The “French” province with its own separate immigration program QSWP (Quebec Skilled Worker Program), which is not part of the nationwide Express Entry system. Montreal is the largest city in Quebec, one of the historical centers of Canada. Real estate here is expensive, but quickly pays for itself when rented out for short-term rent.

Search for real estate in Canada

You can find real estate to buy in Canada on your own, but it is better to contact realtors. Agents have multiple sources of information and can help you find the best option even if the buyer is not located in Canada. Real estate companies draw up an agreement between the owner of the property and a licensed broker (listing). Canadian brokerages and agents consolidate their listings into what is known as the Multiple Listing System (MLS). All properties for sale are combined into a common database, which is available only to licensed brokers. Agents can view and show offers to their clients. The best websites for public viewing and searching for real estate in Canada are:

  • realtor.ca;
  • zoocasa.com;
  • remax.ca.

Transaction procedure

Payment for real estate is made through a Canadian bank. Therefore, the first step for a foreigner who wants to buy an apartment, house or land is to prepare funds. If a foreigner is in Canada, you need to open a bank account and deposit the required amount of money there. If you are staying outside the country, it is recommended to transfer funds in advance, even before you start searching for an object. Since the money transfer can take about 2 weeks, there is a risk of missing out on a lucrative offer.

Buying outside the country

While nothing beats being in the country in person when you buy, buying a home from overseas is easier these days than ever before. Most items have professional photos and videos, floor plans and dimensions. Using Facetime, Skype or WhatsApp, agents virtually guide clients through the property. DocuSign electronic signatures are used to sign a purchase and sale agreement remotely. In order to complete the purchase, it is advisable to be in the country or have a power of attorney, which can be issued from abroad, but the originals must be delivered by courier to Canada.

Signing the contract and transferring the advance payment

Once an offer to purchase has been accepted and an Agreement of Purchase and Sale has been agreed upon, it is common practice to present a non-negotiable check payable within 24 hours. International clients may choose to wire transfer to the listing broker’s insured trust account. This deposit is returned if defects are found during a property inspection or if the buyer is unable to obtain mortgage financing.

Technical and legal review of real estate

Before making a purchase, it is necessary to check the property: whether the characteristics specified in the contract correspond to the actual condition of the property. Technical verification is carried out in the presence of a licensed broker. At this stage, the buyer has the right to refuse the transaction if defects are discovered or the object does not correspond to the description in the contract. A legal inspection of real estate is carried out to ensure that there are no debts. You need to make sure that there are no heirs claiming the purchase, and that the property is not under mortgage or arrest. The inspection is carried out by the buyer’s lawyer. Therefore, you first need to sign an agreement according to which the lawyer is responsible for the “cleanliness” of the property.

Making other payments and closing the deal

At the stage of collecting the amount remaining for full settlement with the seller, the buyer may need to sell his property or take out a mortgage. If the sale does not take place before the closing date or the loan request is rejected, the buyer has the right to refuse to purchase the property. In this case, the advance payment is returned to him. After completing the previous stages and fulfilling the terms of the contract, on the appointed day of closing the transaction, all agreed payments must be made: the remaining amount minus the down payment, the down payment on the loan (if a mortgage is issued), state duties, taxes, attorney fees, etc.

After this, a deed of transfer of property rights is drawn up in the relevant municipal authority (Registry or Land Titles Office). The process is accompanied by lawyers from the buyer and seller. The deed is executed in the form of a document called Transfer/Deed of Land, it secures ownership of the property. From this moment on, the buyer becomes the full owner of the purchased property.

Cost of real estate, taxes and its maintenance

The price of real estate in Canada depends on the region in which the property is located and the form of ownership:

  1. On the primary market in Vancouver, the price of apartments is 16,555.76 EUR per sq.m. Resales here can be valued at 10,873.92 EUR per sq.m.
  2. The primary market in Toronto offers apartments at a price of 7,752.19 EUR per sq.m. Cheap real estate on the secondary market costs 5,333.94 EUR per sq.m.

The cost of Canadian real estate exceeds average European prices. For comparison: the price of finished Warsaw apartments in a new building is 3,467.6 EUR per sq.m. You can buy an apartment in Eastern Europe inexpensively. You can buy a new apartment in the center of Berlin for 7,187 EUR per square meter – this is luxury real estate, but it costs almost the same as an ordinary apartment in a new building in Toronto. Approximate costs of purchasing a home, other than the cost of the property itself:

  • paperwork for a trip to Canada – 125-450 USD;
  • choice of housing and payment for realtor services – 5% of the cost of the property;
  • payment for notary and lawyer services – 400-1000 USD

Costs for maintaining a detached house with an area of ​​150 square meters:

  • electricity – 70-90 CAD;
  • water supply and drainage – 80-100 CAD;
  • gas – 70-130 CAD
  • insurance – 50 CAD
  • real estate tax – 0.75-1% of the value of the property per year.

Can foreigners take out a mortgage loan?

Lending is available to foreign buyers in Canada. Instead of proof of income, the bank will require a larger down payment. Typical down payment requirements for foreign buyers are around 35% of the home’s price. Loan rates for foreign buyers are very similar to the low interest rates available to Canadian residents. A non-resident can only borrow 65% of the purchase price of the property. Since foreign banks are not allowed to register mortgages in Canada, you will have to use a local institution. You can get loan approval as collateral after submitting documents and passing an interview. A mortgage loan issued by a bank against the security of the purchased property is called a mortgage. The loan is issued for a period of 25 years and is divided into principal and interest.

Renting housing for foreigners

There are 2 types of rental housing in Canada:

  1. Apartment buildings are apartment buildings. Buildings in which you cannot buy housing, but only rent an apartment. As a rule, all housing is rented on the same terms, which are specified in the general agreement of the company that owns the entire house. Therefore, there is no point in haggling over the price. The maintenance of the houses is carried out by superintendents (managers). There is no point in haggling about the cost of renting housing in such houses.
  2. Сondominium or townhouse – separate apartments or houses. Each object has a separate owner, with whom you can negotiate the terms and cost of the transaction.

The relationship between the landlord and the tenant is regulated by the Residential Tenancies Act, which is issued separately in each province. A Residential Tenancy Agreement must be signed between the property owner and the tenant. According to Canadian law, in such an agreement the tenant has more rights than the homeowner. In this regard, many apartment owners are very scrupulous when choosing a client. Housing in Canada is usually rented for a period of 1 year, so renting an apartment for several months is problematic. When signing a rental agreement, you must pay for the first and last months of your stay. Foreigners may also need to pay extra for risks.

Can foreigners obtain a residence permit in Canada when purchasing real estate?

Canadian real estate does not provide any special immigration privileges. The purchase of residential and commercial premises is a reliable and profitable investment, but cannot be the basis for legal residence in the territory of the state. If a non-resident does not have a work, student or permanent residence visa, he has the right to stay in the country for no more than 6 months per trip. Some foreigners stay for six months, then leave for a few days and return to Canada again. This practice means actual residence in the territory of the state, disguised as a visitor, and ultimately leads to a ban on entry into the country.

Until 2014, Canada had an investment program that allowed people to obtain a residence permit. The terms required the investor to provide an interest-free, five-year loan to the Canadian government in the amount of CAD 800,000. Due to the fact that most investors began to buy Canadian real estate en masse for doing business and renting out premises, housing began to increase in price, and the government closed the program.

Foreigners can obtain a residence permit in Canada, and then apply for permanent residence and citizenship, in accordance with the Immigration and Refugee Protection Act (IRPA), by opening a business visa with subsequent investments or through the provincial Provincial Nominee Program (PNP). In the second case, immigrants must have certain skills and work experience in order to receive an invitation from the provincial authorities.

Buying real estate in Canada