The federal government is under pressure to relax the foreign homebuyer ban, as builders deal with one of the worst real estate slowdowns in decades.
Mattamy Homes, Minto Group, Great Gulf, Canderel and DiamondCorp are among the group of major developers urging Ottawa to allow foreigners to buy preconstruction condos and houses.
It’s one of 10 recommendations that the developers say will help them access much needed capital and reduce the cost of construction, according to a pre-budget letter they said they submitted to the House of Commons standing committee on finance in July.
The foreign buyer ban, which is due to expire Jan. 1, 2027, was introduced during the pandemic’s real estate frenzy when home prices doubled in some parts of the country.
At the time, the federal government said it would help stabilize housing and ensure Canadians had more access to purchasing homes. The policy prevents foreigners from buying existing and preconstruction homes.
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But as borrowing costs increased in 2022 and 2023, the real estate market slumped, and demand dried up for preconstruction homes. Sales have dropped significantly in the regions of Toronto, Vancouver and Ottawa. And over the past few years, developers have postponed and canceled projects because they are unable to sell the minimum amount needed to obtain construction financing from lenders.
“Unfortunately, the ban, as currently implemented, has reduced the supply of pre-construction financing, which in turn reduces the number of units available to families in Canada,” says the developers’ letter, dated July 31 and made available on Thursday.
The developers, called the Large Urban Centre Alliance because they represent homebuilding in six of the country’s major municipalities, said this would help unlock “billions in private capital.”
The alliance is also recommending that the federal government expand and speed up the approval process of its $55-billion apartment construction loan program. It provides cheap loans to developers to build rental-only housing as long as specific affordability requirements are met.
Another recommendation is waiving the 5-per-cent federal goods and services tax or GST for repeat buyers of preconstruction homes who plan to live in the property. The federal government’s proposed GST tax waiver would only be available for first-time preconstruction homebuyers.
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The letter also urges Ottawa to provide the GST waiver on new rental-only buildings for projects currently under construction. The tax break, which was announced in September, 2023, does not apply to projects that started prior to that date.
About 75,000 rental units are under construction but ineligible for the tax break because the development started before the rebate announcement, according to the letter’s background report.
“Many of these projects currently face risks of emergency capital funding, being halted or facing insolvency,” says the report, which was authored by Mike Moffatt, founding director of the University of Ottawa’s Missing Middle Initiative.
Earlier in July, major B.C. developers had called on Prime Minister Mark Carney and Housing Minister Gregor Robertson to relax the foreign buyer ban.
The alliance was supported by the Building Industry and Land Development Association, a trade group, and includes developers Canderel, Cantiro Homes, DiamondCorp, Fitzrovia Real Estate, Great Gulf, Menkes Developments, RioCan REIT, Polygon Homes, Wesgroup and Tricon Residential.
Editor’s note: A previous version of this article included incorrect information provided by the trade group BILD. The trade group incorrectly included Bentall Green Oak as part of the Large Urban Centre Alliance; Bentall Green Oak is not part of the alliance. (Aug. 11, 2025) A previous version of this article incorrectly stated that the foreign buyer ban is due to expire at the end of 2027. It is due to expire Jan. 1, 2027.