Here’s a scenario, a fictional one, but one that is rooted in truth…
A prominent Toronto hospital has been looking for a thoracic surgeon for quite some time.
Canada is no longer producing the homegrown talent that it once did, and to satisfy our growing (and aging) population, with a healthcare system that is on the brink, our medical industry is constantly forced to look outside our borders to find personnel.
Fortunately, a prominent thoracic surgeon is found.
The recruitment process begins.
A pitch is made.
A job offer is extended.
The individual has no shortage of suitors and is considering relocating to a variety of different places.
Not just different cities within Canada or North America, but different cities around the globe. Different countries, different cultures, different lifestyles, and within all that comes different economies, different political systems, and different housing markets.
The individual is quite keen on the city of Toronto.
It’s a world-class city (according to some people…), it’s multicultural, it’s home to fantastic sports, music, and arts, not to mention offering perhaps the most diverse array of culinary options you’ll find on the continent.
Toronto has been over the years on lists like the “Global Liveability Index” and the “Quality of Life Index.”
There’s a lot to like about this city.
Unfortunately, after the prominent surgeon tours the city, gathers information and intelligence, and compares it to offers from other cities, Toronto ends up ranking dead last on the surgeon’s list of potential cities to move for work.
Why?
Because if the sought-after thoracic surgeon wanted to purchase a house for his or her family, then 35% in “speculation taxes” would apply.
Nobody in their right mind would move to Toronto, buy a $3,000,000 house, then pay the government $1,050,000 in non-resident speculation taxes, on top of $122,950 in land transfer tax.
If and when the thoracic surgeon obtained his or her “Permanent Resident” status, that $1,050,000 in non-resident speculation taxes would (presumably…) be refunded, but I don’t believe there’s a person on the planet who would choose this city over Boston, Boise, or Baton Rouge…
You might be wondering, “Why are you talking about non-resident speculation taxes when the topic of today’s blog post is the foreign buyer ban?”
Well, because both of these ideas and pieces of legislation were introduced with the same purpose.
Perhaps not the same express purpose, and perhaps as the years have gone on, politicians and civil servants have attempted to change the narrative, but I think you’d be hard-pressed to argue against the following point:
Foreign buyer bans and speculation taxes were introduced in order to “make housing more affordable” for everyday Canadians.
You can almost picture somebody standing at a podium when you hear the words “everyday Canadians,” can’t you?
It goes hand-in-hand with some sort of spiel about what the government is doing to “put money back in your pockets,” and so on, whether it’s municipal, provincial, or federal.
But before we further examine my not-so-fictional account of a sought-after thoracic surgeon turning down a job offer and subsequent move to Toronto, on account of having to pay 35% in combined municipal and provincial speculation taxes, I want to introduce you to this article which ran in the Financial Post last week:
“It’s Time To Get Rid Of The Foreign Buyers Ban On Housing, But Don’t Expect It To Save The Market”
Financial Post
July 6, 2026
Right off the bat, I’m irked.
We talked politics here on TRB last week, and many people came out swinging, which is to be expected when I offer opinions that are at odds with 66.26% of Canadians, statistically speaking.
So maybe it will surprise you to know that I am not in favour of “saving the market,” nor do I believe that a foreign buyer ban or speculation tax should have anything to do with “the market.”
In fact, I’ll do you one further. I’ll tell you how and why this line of thought got us into trouble in the first place. Hold that thought…
From the article:
In six months, the federal government’s ban on foreign ownership of Canadian housing expires, and hopes are high in real estate circles that Ottawa will let it lapse.
Much has changed in real estate since the Prohibition on the Purchase of Residential Property by Non-Canadians Act was passed in 2022, banning most foreign ownership with some exemptions. It was set to expire on Jan. 1, 2025, but was extended for two years and since then, things have only gotten worse for the housing market.
Hopes are high in real estate circles, eh?
Which real estate circles?
Please don’t paint us all with the same brush. There are real estate brokers, real estate investors, real estate developers, and the like.
Now, here’s where you’ll find the origin of my thesis, as the article continues:
How bad? Research firm Urbanation has said standing inventory in the Greater Toronto-Hamilton Area hit a record high in the first quarter of this year, just 246 newly built units sold in a metro area of about 7.1 million people. For the first time in three decades, no new condo projects were launched in a quarter.
This is my point.
This is how we got into this mess.
We’re talking about “newly built units” and “new condo projects.”
But don’t you see the irony here?
“Real estate circles,” as the article specifies, which is surely talking about real estate developers are looking for the foreign buyer ban to end so they can sell “newly built” properties, which is a nice way of saying pre-construction condos.
The article talks about the market stalling, with 246 units sold, and no new launches.
And this is……….because of the foreign buyer ban?
In part, sure. A very small part.
But a very large part of the run-up in pre-construction prices from the mid-2000’s through the peak in 2022 was because foreign buyers were pumping money into the country.
Canada became a safety deposit box for foreign money, both the clean kind and the dirty kind.
Come one, come all. Bring your money, no matter where it’s from. Buy square footage in the sky, then flip the paper to a greater fool, and don’t declare tax on the profit because you have never set foot in the country! And if you’re not in it for the profit, and you simply want to get your money out of an oppressive country, then feel free to buy our real estate and keep it empty.
That was then.
And this is……then, apparently?
“Real estate circles” are looking to remove the foreign buyer ban so we can return to selling pre-construction condos to people who can afford 40-50% above fair market value?
That can’t be it. It just can’t be.
People quoted in the article are talking about how the foreign buyer ban “discourages investment in Canada.”
But what kind of investment do we want?
We want investment in businesses and infrastructure. We want advances in energy, technology, machinery, farming, and, yes, housing.
Of course, housing!
But not by individual investors buying pre-construction condos. Nope. Not that.
By “investment in Canada,” I would like to see foreign money construct, own, maintain, and manage purpose-built rental properties in Canada, creating supporting infrastructure, adding jobs to the economy, and contributing to GDP. This is very, very different from what “people in real estate circles” are peddling in the media.
Now, I suppose a larger part of the conversation is why pre-construction condos were only affordable to foreign investors and not domestic investors, or, more importantly, domestic end-users.
This would have more to do with the cost of land, cost of labour, cost of materials, and the absurd amount of taxes included in the cost of any newly-constructed dwelling, so maybe it’s worth mentioning that if only foreign money can afford to pay the premium required so that developers can make a profit, then there’s something wrong with the system.
We know this now, of course. With the benefit of hindsight, and seeing the pre-construction market completely collapse, we have grown to understand this quite well!
But what I find most troubling is that, instead of breaking down the system of pre-construction condominium planning, development, sales, construction, financing, and delivery, and attempting to “find a better way,” there seem to be people arguing, “We need to just go back to the way it was; we need foreign money to come back in and buy up over-priced square footage in the sky.”
When the “Prohibition on the Purchase of Residential Property By Non-Canadians Act” was first introduced, it was sold to us as a way to make housing more affordable.
The thinking went like this:
Ban foreign buyers.
Narrow the buyer pool.
Reduce demand.
Prices decline.
Whether or not the decline in housing prices from 2022 onward had a little, a lot, or absolutely nothing to do with the foreign buyer ban, remains to be seen.
But the major problem with the “ban” was that it was federal legislation that didn’t work alongside municipal and provincial legislation that followed, most notably the “speculation taxes.”
For example, the federal ban offered several exemptions, such as:
- Work permit holders.
- Spouses of Canadian citizens.
- Students who have been in the country for five years, buying up to $500,000.
- Foreign nationals with diplomatic passports.
It’s #1 on the list that I want to focus on, because I think this is where our collective municipal, provincial, and federal legislation has failed us.
You know the thoracic surgeon I mentioned at the onset?
Well, he’s exempt from the foreign buyer ban.
He has a work permit.
More than just a work permit, of course, since he would be moving to Toronto to start what would hopefully be a long and impactful career, along with his spouse, children, dog, and goldfish.
He’s not a guy coming here for 183 days to benefit from our social services, nor is he being brought here for cheap labour.
This is an individual who would be coming to this country, bringing desperately needed labour and skill, and essentially becoming as Canadian as one could be.
Unfortunately, the “speculation taxes” still apply as follows:
25% tax in Ontario, called the “Non-Resident Speculation Tax.”
10% tax in Toronto, called the “Municipal Non-Resident Speculation Tax.”
This is from the Ontario government website regarding the NRST:
If you have applied to become a permanent resident of Canada, but you have not obtained that status at the time your home transaction closes, you must pay NRST unless you are eligible for an exemption. If you become a permanent resident of Canada after the home transaction closes, you may qualify for a rebate of the NRST if you meet specific requirements. Please see our Non-Resident Speculation Tax rebates and refunds page.
So let’s say that folks in the “real estate circles” get their way.
Let’s assume that the federal government decides to lift the “foreign buyer ban” as of January 1st, 2027.
Can our thoracic surgeon buy a house here in Toronto for him and his family?
No.
He can not.
Practically, yes, he can.
But logically, he absolutely, positively can not.
With a collective 35% in taxes on the purchase of a primary residence, he is effectively “banned.”
Tell me it’s not a ban, and I’ll tell you it’s a ban.
“But David, the paragraph above says, ‘If you become a permanent resident of Canada after the home transaction closes, you may qualify for a rebate of the NRST if you meet specific requirements.’ So the thoracic surgeon could get his money back once he obtains his PR card.”
Sure. He could.
But would you trust that sentence?
You may qualify for a rebate of the NRST if you meet specific requirements.
Would you bet on this?
Even if you had an extra $1,050,000 laying around to “lend” to the city and province for 12-24 months while you get your PR card, would you?
No chance.
Back in February of 2025, I covered this topic:
“Do The Speculation Taxes Actually Target Speculators?”
Spoiler alert: they do not.
But they do deter, offend, insult, and discourage the very people that we need to bring to this country. They make it impossible to attract desperately needed individuals across all kinds of industries, all under the guise of “making real estate more affordable for everyday Canadians.”
I can’t believe that nobody at City Hall or Queen’s Park has given this any thought.
This is basic stuff that we learned on Sesame Street when we were kids.
“One of these things is not like the other, right?”
Try this on:
a) A family of four, relocating from Bakersfield, California, with the adults teaching at Ryerson and the University of Toronto, and the children attending the local public schools, wish to purchase a single-family dwelling in High Park.
b) An individual located in mainland China wishes to transfer $100,000 CAD to the trust account of a Toronto law firm to act as a deposit for a pre-construction condo that will be completed in six years.
Do you notice a difference?
Because if you do, it seems we’re the only ones.
So should we remove the federal “foreign buyer ban?”
If we want to sell more pre-construction condos, then I guess so.
But in my opinion, we should be discussing the most misguided piece of real estate legislation that I’ve ever seen, and the dreadful impact it’s having on our economy and the future of our country…
