Commercial Real Estate in Ontario and British Columbia: A Year in Review

Commercial Real Estate in Ontario and British Columbia: A Year in Review
May 5, 2024

The year 2023 saw significant legislative shifts in Ontario and British Columbia, impacting the commercial real estate landscape. While these changes primarily targeted the residential housing market, their ripples extend to commercial properties as well. This article delves deeper into these legislative updates, analyzing their potential implications for commercial real estate investors and businesses.

British Columbia

Legislative Changes and Their Potential Impact.

Prohibition on the Purchase of Residential Property by Non-Canadians Act

  • Background: Introduced in 2023, this Act restricts non-Canadians from directly or indirectly purchasing residential properties in Canada. The initial aim was to curb speculation and cool down the overheated housing market.
  • Impact on Commercial Real Estate:  The Act's reach extends beyond single-family homes and condos. Commercial properties containing residential units, such as a building with live-in caretaker quarters, could be caught in the web. Potential buyers of such properties may face delays or require additional scrutiny to demonstrate compliance.
  • Amendments and Ongoing Challenges: The Act initially raised concerns for commercial transactions. Amendments were introduced in March 2023 to narrow its focus on residential purchases. However, some uncertainties remain.  For example, private corporations, REITs, and limited partnerships with a high percentage of non-Canadian ownership may still face challenges acquiring commercial properties with a residential component.

Broadened Speculation and Vacancy Tax

  • Background: This tax was implemented to encourage owners of vacant residential properties to rent them out, thereby increasing overall rental supply and moderating housing prices.
  • Expansion: Initially, the tax applied to specific municipalities experiencing low vacancy rates. The provincial government has expanded the tax to additional municipalities in 2024, aiming for a wider impact on vacancy rates.
  • Impact on Commercial Real Estate: While not directly impacting commercial properties, the tax's broader application could potentially free up some commercial spaces previously used for storage due to a lack of viable rental options. This could increase commercial space availability in some areas.

Remote Witnessing of Land Title Documents

  • Background:  COVID-19 pandemic restrictions previously allowed for remote witnessing of land title documents through affidavits of execution.
  • Change in Policy: As of September 2023, remote witnessing solely due to COVID-19 concerns is no longer permitted. Land title documents require in-person witnessing by a qualified professional, reverting to pre-pandemic protocols.
  • Exceptions:  In rare cases, parties may still request remote witnessing if there are legitimate and documented medical concerns related to COVID-19. However, these requests are assessed on a case-by-case basis by the registrar and require specific justifications.

Ban on Restrictive Strata Bylaws

  • Background:  The provincial government enacted measures addressing the housing crisis by targeting overly restrictive bylaws in strata buildings (condominiums).
  • Changes:  Most rental and age restrictions in strata buildings have been removed. Buildings can no longer screen tenants based on age or restrict rentals altogether.
  • Impact on Commercial Real Estate:  This primarily affects residential strata properties. However, some commercial buildings may operate within mixed-use developments with shared governance structures. In such cases, the changes could potentially increase the number of available rental units for employees or business owners within the development.

GST Rebate for Rental Buildings

  • Federal Initiative:  The federal government introduced Bill C-56 in September 2023, offering an increased rebate on the Goods and Services Tax (GST) for new purpose-built long-term rental buildings. These include apartment buildings, student housing, and senior residences.
  • Eligibility and Benefits: The rebate applies to properties with at least four private apartments or ten private rooms designated for long-term rentals. Projects that began construction between September 14, 2023, and December 31, 2030, and are completed by December 31, 2035, qualify. The existing GST rebate is 36%, and Bill C-56 proposes an increase to 100%. This significant incentive aims to encourage developers to focus on long-term rental projects, potentially increasing rental stock in the future.
  • Impact on Commercial Real Estate: While not directly targeting commercial properties, the increased incentive for rental development could indirectly create more competition for land and construction resources. This could potentially affect timelines and costs for commercial development projects.

Property Transfer Tax Amendment for Qualifying Purpose-Built Rental Property

  • Provincial Initiative: British Columbia introduced Bill 10 in May 2023, amending the Property Transfer Tax Act. This amendment offers an exemption for qualifying purpose-built rental buildings from a specific portion of the property transfer tax.
  • Exemption Details: The exemption applies to the additional 2% property transfer tax on the portion of the residential property value that exceeds $3,000,000. This tax was introduced in Budget 2023 and applies to all residential property purchases, not just commercial properties.
  • Qualifying Criteria: To be eligible for the exemption, the purpose-built rental building must meet specific criteria:
    • Purchased on or after January 1, 2024 (only applicable to the additional 2% tax)
    • Purchased between January 1, 2025, and December 31, 2030 (for a full exemption from the general property transfer tax)
    • Located in British Columbia
    • Newly built as a rental building
    • Entirely used for rental purposes in the residential (Class 1) portion of the building
    • Not a resale or previously occupied residence
    • Non-stratified (meaning the building is not divided into individual units for ownership purposes)
    • Contain at least four separate apartments at the time the property is registered at the Land Title Office
  • Impact on Commercial Real Estate: This exemption primarily benefits developers constructing new purpose-built rental buildings. However, it could indirectly impact the commercial real estate market by encouraging the development of more rental units, potentially easing pressure on commercial spaces being used for storage due to a lack of available rentals and Increasing competition for land and construction resources, potentially impacting timelines and costs for commercial development projects.


Legislative Changes and Their Potential Impact.

Condominium Act

  • Background:  The Act was updated in 2023 to allow condominium corporations to hold virtual meetings, including voting, for the first time.
  • Impact on Commercial Real Estate: This change primarily affects residential condominiums. However, for mixed-use developments with commercial units governed under a condominium structure, virtual meetings can streamline decision-making and improve participation for business owners.

Planning Act

  • "Use it or Lose It" Approach for Ministerial Zoning Orders (MZOs):  The provincial government is taking a stricter stance on MZOs, a tool used to expedite zoning changes.
  • Changes:  Under Bill 31, passed in 2023, developers who receive MZOs for specific development projects will face stricter timelines for initiating construction. Failure to meet deadlines could lead to the MZO being revoked.
  • Impact on Commercial Real Estate: This "use it or lose it" approach aims to prevent speculation and ensure that MZOs are used for projects that move forward promptly. This could potentially lead to a more predictable development timeline for commercial properties, particularly in areas where MZOs are frequently used.
  • Consultations on New MZO Framework:  The Ontario government is also conducting consultations to create a new framework for future MZO requests. This could lead to stricter requirements and increased scrutiny for commercial development proposals seeking MZO approval.

Bill 97: Helping Homebuyers, Protecting Tenants Act

  • Background:  This Act, passed in April 2023, grants the Minister of Municipal Affairs and Housing new powers to influence development on private land. This includes the ability to set minimum heights and densities for new residential development projects.
  • Impact on Commercial Real Estate:  The Act primarily focuses on residential development. However, it also mandates fee refunds to municipalities if the provincial government overrides a local zoning bylaw. This could potentially affect commercial development projects if it discourages municipalities from exercising local control over zoning decisions. Additionally, the Act's ability to set minimum densities for residential development could indirectly impact the availability of land for commercial development in some areas, particularly those zoned for mixed-use projects.

Redefining "Area of Employment"

  • Changes:  Bill 97 also redefined the term "area of employment" used in provincial planning policies. Certain commercial uses, such as big-box stores and gas stations, are no longer included in this definition.
  • Impact on Commercial Real Estate: This change could lead municipalities to redesignate some lands previously zoned for commercial uses as "residential" to meet provincial density targets. This could potentially impact the availability of certain types of commercial space in specific areas.

Bill 112: The Hazel McCallion Act

  • Background:  The provincial government initially planned to dissolve and merge certain municipalities, including the Region of Peel. This move faced strong local opposition.
  • Change in Course: In November 2023, the government announced the cancellation of Bill 112, effectively abandoning plans to dissolve the Region of Peel.
  • Impact on Commercial Real Estate: This reversal provides some certainty for commercial development projects planned within the Region of Peel. The previous uncertainty surrounding the region's future structure could have potentially discouraged or delayed commercial development proposals.

Ontario Property Reassessments

  • Background:  Property assessments are used to determine property taxes in Ontario. Assessments are typically updated every four years. Due to the COVID-19 pandemic, the provincial government extended the use of 2016 property assessments for another year in 2023.
  • Impact on Commercial Real Estate:  This delay in property reassessments could lead to concerns about the fairness of property taxes, particularly for commercial properties whose values might have significantly increased since 2016.  Some commercial property owners may face higher tax burdens than others due to the outdated assessments.

Changes to the Ontario Heritage Act

  • Background:  The Act was amended in 2023 to establish deadlines for municipalities to designate properties of cultural heritage value on the provincial heritage register.
  • Impact on Commercial Real Estate:  This could potentially impact commercial properties with heritage value. Timely designation by municipalities provides greater clarity for developers and property owners considering renovations or redevelopment of such properties. Delays in designation could lead to uncertainty and potentially stall development projects.

Law Society of Ontario Policy

  • Background:  The Law Society of Ontario, the governing body for lawyers in the province, implemented a new policy in September 2023. This policy requires lawyers and paralegals to use a specific process to verify client identities virtually when dealing with real estate transactions.
  • Impact on Commercial Real Estate: This new policy could potentially lead to delays in closing commercial real estate transactions, especially for those with complex ownership structures or involving non-resident buyers. Lawyers will need to factor in additional time for the required virtual identity verification process.


The legislative changes implemented in Ontario and British Columbia in 2023 have created a dynamic environment for commercial real estate. While the primary focus was on residential housing affordability, the ripples of these changes will be felt in the commercial sector as well. Investors and businesses need to stay informed about these evolving regulations to navigate the potential opportunities and challenges they present.

Here are some key takeaways for commercial real estate professionals:

  • Increased Scrutiny for MZO Projects: Developers seeking MZOs for commercial projects in Ontario can expect stricter timelines and a more rigorous approval process.
  • Potential Land Use Shifts: Redefinition of "area of employment" in Ontario and restrictions on certain strata bylaws in British Columbia could lead to land use redesignations, impacting the availability of specific commercial spaces.
  • Competition for Resources: Increased incentives for rental development projects could create competition for land and construction resources, potentially affecting timelines and costs for commercial development.
  • Uncertainty in Property Taxes: Delayed property reassessments in Ontario raise concerns about the fairness of commercial property taxes.
  • Virtual Identity Verification Delays: The new Law Society of Ontario policy could lead to delays in closing commercial real estate transactions.

This is not an exhaustive list, and staying up-to-date on further legislative developments and policy changes will be crucial for navigating the commercial real estate landscape in Ontario and British Columbia.



A detailed analysis of the legal aspects is beyond the scope of this article. Readers are advised to consult with a qualified legal professional for specific legal advice related to commercial real estate transactions.

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