A Sooke business continues to face challenges as the federal government upholds a ban on foreign purchases of Canadian housing.
Michael Thornton, founder and developer of Sooke Ocean Cottages, acquired the property in 1996 and has been attempting to turn it into a world-class resort ever since.
To fund the project, he began selling vacation cottages in 2014. Now, he says the Prohibition on the Purchase of Residential Property by Non-Canadians Act is hindering the future of the business he envisioned almost 30 years ago.
“To make money and put it into amenities and do expansion, you need that extra velocity, that extra profitability, if you will, per square foot that you can reinvest,” Thornton said, emphasizing the importance of selling to foreign buyers.
“That was all stripped away without advance notice from the federal government a little more than two years ago.”
The act, originally introduced in early 2023, prohibits non-Canadians from purchasing real estate in Canada, directly or indirectly. In 2024, the government granted a two-year extension, cementing the ban until Jan. 1, 2027.
Thornton said foreign buyers originally made up one-third of his business. Since that stream of revenue was lost, he hasn’t had the funds to build additional resort amenities. He believes the impact on his business stems from the act misclassifying his property.
“The issue stems from an inaccurate definition within the act, which has unintentionally misclassified destination resort properties within Census Metropolitan Areas as ‘residential,’ even when zoning explicitly designates them for tourism and resort use,” Thornton said in a press release.
He further asserted that since his property maintains a Class 6 ‘Business’ designation, it should be exempt. However, a statement from Geoff Koehler of the Ministry of Housing, Infrastructure and Communities explained that the properties were considered recreational and therefore fall under the act’s jurisdiction.
“Canada is in the midst of one of the most impactful housing crises this country has ever faced,” Koehler stated.
“The prohibition reduces the impact of foreign ownership demand and is just one of a series of concrete measures taken by the federal government to address Canada’s housing shortage. It ensures more homes are used for Canadians to live in, not as a speculative asset class for foreign investors.”
Thornton, however, did not intend to sell dwellings for long-term use. However, given the resort’s isolation in East Sooke, there are no surrounding amenities available for guests, requiring Thornton to provide kitchens and more home-like features to attract buyers. This has contributed to his classification as a recreational property, meaning his cottages fall under Victoria’s CMA and are impacted by the ban.
“The way they have defined what is residential and what is a dwelling unit catches destination resorts that are not meant to be residential,” Thornton said.
“Even if we want to pre-sell our hotel suites, the bylaw absolutely prohibits stays other than for short-term use.”
Meanwhile, businesses in areas outside Canada’s CMAs, such as Banff, Whistler, and Mont-Tremblant, have not been impacted.
“They’re basically putting us out of business – or trying to. They’re seriously putting us on life support, and there seems to be no concern at all,” Thornton said.
“We have been unable to build a restaurant, a wedding facility or a spa. We're not operating the way we planned. We don’t have the money to do the things we planned because the federal government has chained us up and prevented that.”
