GUEST SUBMISSION: Canada’s foreign buyers ban was sold as a protection for Canadian buyers, and while the rationale was valid at the time, it’s done little to correct the market’s larger structural problems.

In fact, the housing market has tightened since the ban was enacted in 2022.

The foreign buyers ban came from a place of concern for limiting foreign buyers from competing with Canadians for existing homes.

However, foreign buyers are such a small part of our national housing market, making up under one per cent of ownership nationally.

Plus, the ban doesn’t account for the true value of foreign capital in real estate.

Blanket ban or targeted approach?

There is much debate over whether a blanket ban or a targeted approach should win the day as the ban comes up for renewal, but buying is not the only way foreign capital flows into our housing market, and the outcome of that financing isn’t as doom-and-gloom as some might paint it.

Foreign capital has an important place in helping solve our nation’s real estate market, but in areas that are often overlooked.

The foreign buyer ban expires in 2027, and in its current state generally prohibits foreign nationals and commercial enterprises from purchasing residential property in Canada. Since 2022, there have been some exemptions to allow for foreign purchase of vacant land and residential properties intended for redevelopment.

Mainstream debate over foreign buyers has been focused on 'buy vs. don’t buy.' However, the true story is much more nuanced than that.

As it stands, the current ban limits foreign ownership of homes, but secured lenders and creditors are exempt.

Meaning foreign banks or lenders are still accessing the Canadian housing market through mortgage investment corporations (MICs) and private lenders, allowing them to gain economic exposure without ownership of title.

With foreign buyers only making up a minuscule portion of the ownership market, this brings into question what value the ban actually provides.

The role of private lenders

Economists and industry voices have been arguing either for a blanket ban or a targeted approach with the goal of creating more housing supply. Private lenders and MICs are already the plumbing that connects foreign capital to Canada’s housing market.

Foreign capital is still flowing into our housing market, so the question is why not make it work to our benefit?

Private lenders and MICs play an important role in our housing market. If the intent is to make it easier for everyday Canadians to purchase homes at an affordable price, private lenders are making that possible.

As the Founder and CEO of CMI Financial Group, I see every day the impact private lending has on creating access to homeownership.

Private or alternative mortgage lenders serve borrowers who don’t fit conventional bank underwriting: the self-employed and newcomers being two examples. These borrowers tend to be creditworthy in substance but don't fit standardized bank criteria. The portion of Canadians not fitting that standard is only growing.

MICs and private lenders fund construction and redevelopment, and are absorbing the mortgage renewal pressures, making them a meaningful part of the financing stack behind new housing supply.

If we as a nation are to solve our housing crises, more access to home loans through a disciplined and ethical approach is paramount.

MICs are an investment vehicle for both foreign capital and Canadians, helping grow national wealth.

The future of foreign capital in housing

When considering the future of the foreign buyers ban, the real choice isn’t about whether we open Canada to foreign money or protect Canadians; it’s whether the next policy accounts for how foreign capital actually flows into the market and adjusts accordingly.

Prime Minister Mark Carney’s government has been clear about considering a new approach rather than extending the current ban. His government has expressed an appetite for foreign capital to help address Canada’s housing market and the consideration of tax code reform to attract large foreign investments.

Any new approach that only takes into account who can buy without addressing who can lend will have the same structural gap as the current ban. Foreign capital plays a role in easing Canada’s housing supply; the key is in understanding it better.