In an attempt to solve their ongoing housing crisis, Canada introduced a two-year ban on foreigners buying homes in January 2023, one of Prime Minister Justin Trudeau’s key campaign commitments. Since then, however, the Canada Mortgage and Housing Association (CMHA) has announced several amendments to the legislation, allowing non-Canadians to buy residential properties under certain circumstances. But what, if anything, could this mean for the London market?
An ongoing discrepancy between supply and demand for properties is still prevalent in London, and a similar situation exists in large Canadian cities like Toronto and Vancouver. The obvious solution is to build more houses, but this takes time and in the interim, a ban on selling to foreign buyers is seen as a fast route to providing more available housing to those looking right now. The question is, will it make a discernible difference going forwards?
Housing affordability remains a source of anxiety for many Canadians, who feel in the current climate they stand little or no chance of getting onto the housing ladder. Meanwhile, in Toronto alone, 3% of properties in 2020 were owned by non-residents. While that might not sound like much, it in fact amounts to more than 45,000 properties, many of which stand empty or underused. Just 15% of these properties would be enough to house Toronto’s homeless population in 2021.
Yet the fact remains, there’s still no clear evidence that overseas buyers are increasing the price of property in Toronto. Rather, by investing they’re boosting the economy, which in turn allows more houses to be built. Meanwhile, a lack of clear data regarding the problem makes it difficult for legislators to fully grasp the issue. Instead, significantly more research is required to draw any definitive conclusions about the effects of foreign ownership.
Meanwhile, London has the highest percentage of properties registered to overseas owners anywhere in the UK. Concentrated predominantly in inner London, a lack of available information means there’s little way of accurately understanding how these homes are being utilised and whether or not they’re contributing to the housing crisis. Of the government research that can be accessed, it’s understood that 87, 731 London properties were left vacant in 2021, although how many of these were registered to an overseas address remains unclear.
What is clear is that analysing the impact of reducing foreign ownership in Canada could provide useful insight into solving the London housing crisis. It’s also true that legislators have a responsibility to examine every aspect of this issue in order to determine a solution. This ultimately means using existing stock, building more homes and implementing a range of concrete solutions that successfully solve the problem.
Sources: CTV News, Centre For London, Forbes Advisor