CANADA – QUEBEC Trends and Developments Contributed by: Eleonora Eusepi, Alain Castonguay, Joseph Piazza and Alessia Talarico, BCF LLP
jects as it would negatively affect the profit - ability of their projects and increase construc - tion costs. Rather than participate in such programmes, many developers have instead opted to pay penalties rather than comply with the By-law’s requirements. In March 2024, the City announced modifications to the By-law to reverse these unintended consequences by try - ing to alleviate the financial burden on develop - ers and accelerate the construction of social and affordable housing. On another note, over the last year, the Canada Mortgage and Housing Corporation (CMHC) has announced several new housing projects designed to tackle Canada’s ongoing affordabil - ity crisis, including initiatives available in cities across Quebec. One such initiative is the Accel - erated Housing Fund, which aims to speed up housing construction by reducing permit delays and updating local zoning policies. These types of initiatives funded by the federal government are part of its broader strategy to build more homes quickly and increase competition in the housing market, ultimately helping to lower housing prices. Prohibition on the Purchase of Residential Property by Non-Canadians Act To help preserve the housing supply, in January 2023 the federal government of Canada enacted the Prohibition on the Purchase of Residential Property by Non-Canadians Act (the “Prohibition Act” ), aiming to increase housing availability and affordability by restricting non-Canadians from purchasing certain types of residential proper - ties in census agglomerations and metropolitan areas.
Initially for a period of two years until 1 Janu - ary 2027, the prohibition has been extended for an additional two years in response to ongoing housing supply challenges. Violations of the Prohibition Act can result in fines and even court orders obliging the resale of the property in question without profit. Conclusion Quebec’s real estate market is undergoing a significant transformation, driven by evolving tax policies, amendments to competition laws, geopolitical shifts and an escalating housing crisis – particularly in urban hubs like Montreal. While the proposed capital gains tax hike was ultimately abandoned, the turmoil it caused led to investor uncertainty and hasty decision-mak - ing, highlighting how unpredictable policies can undermine market confidence. Meanwhile, revi - sions to the Competition Act are reshaping the landscape of commercial real estate by impos - ing stricter controls on mergers and anti-com - petitive behaviour. These changes aim to foster fairness but also introduce new challenges for developers and landlords navigating the com - plexities. As for the housing crisis, addressing it efficiently calls for coherent policies, enhanced collaboration and a careful balance between regulatory measures and practical development needs. Sustainable solutions must be flexible, grounded in reality and designed to stand the test of time.
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