How to Buy Land in Ontario: A Full Guide

You might be looking to buy land in Ontario to build your future home, for commercial purposes, or as an investment. Buying land in Canada can be complicated and requires a lot of research. Here are a few things to look out for when buying land in Ontario.

Land in Ontario can be classified in three main ways: raw or vacant, private or crown, and zoned or unzoned. These classifications reflect the land's specific properties, allowing the parties involved to understand what the land has, who the actual owner is, and how it can be used.

This classification describes whether there are any human-made structures in the land. Raw land has not been developed, while vacant land has. This means that raw land does not have supporting structures like utility lines, while the vacant land may have some.

Comparison of Different Types of Land in Ontario

Raw land

• Never developed, with no utilities such as power or water, no structures, and sometimes no road access
• Usually requires the most work before construction can begin.
• Financing is generally more difficult.

Vacant land

• Has seen prior development, so it may already have utilities or other structures
• Cheaper to make habitable, though the value of that infrastructure is priced into the land
• Can be found within or close to cities, which may push prices higher
• Generally priced above raw land

Serviced vs. unserviced vacant land

• Serviced land has municipal water, sewer, hydro and gas brought to the lot line, ready to connect once you build
• Unserviced land has no services at the lot line, though lines may run nearby along the road allowance. Bringing them in is at your cost

A person or a corporation owns private land, while Crown land belongs to the government. Most land in Ontario is Crown land, which is public land owned by the provincial government. 87% of Ontario is Crown land, with nearly all of northern Ontario being Crown land, while southern Ontario is mainly privately owned.

You can buy crown land, but there are restrictions and conditions on land use. Crown land can be bought or rented for specific uses. Applications to purchase or use Crown land will be reviewed using Ontario’s Crown Land Disposition Policy, which helps to ensure sustainable development. Crown land is sold at market value, with exceptions allowing Crown land to be sold under market value for purposes that benefit the public. If you choose to rent Crown land, your rent is based on the market value of the land, with a minimum annual rent amount.

Ontario Crown Land Rent (% of Land Market Value)

Source: Ontario Ministry of Natural Resources and Forestry

Leasing, license of occupation, and land use permits do not give you ownership of the land, but they give you the right to use the land. Leases give you the exclusive right to use the land. Land use permits are usually for up to 10 years, license of occupation for up to 20 years, and leases for 20 years or more. Only leases can have a negotiated right of renewal.

Zoned land is within a municipality's zoning control and subject to zoning bylaws. Zoning limits the use of land and the structures that can be built on it. Unzoned land is typically outside the municipality's zoning control and does not have zoning bylaws to adhere to, but it is still subject to provincial regulations. In rare cases, unzoned land can be found in small municipalities with very sparsely populated areas.

Zoning is a legal tool for municipalities to control the development of neighbourhoods and the city's structure. It usually dictates the permitted uses of land, development standards, and other regulations affecting the land. In Ontario, zoning bylaws are created under the authority of the Ontario Planning Act, which municipalities have to adhere to for zoning purposes. Every municipality has its own zoning standards and classifications.

Zoning Land Categories in Toronto

Source: Toronto Zoning By-Law.

It is challenging to compare zoned and unzoned land as they are usually located far apart. Even though zoned land is more restrictive, it is usually more expensive than unzoned land because of its proximity to municipal services, infrastructure, and other people. Unzoned land offers more freedom to the owner, but it may not be a good investment for business development.

You can get a land loan from some credit unions, B lenders, or a private lender in Ontario. Some banks may also offer land loans, such as the Scotiabank lot loan. Vacant and raw land is risky for a lender since it has no money-making or residential buildings, which makes it a risky investment. Depending on the type of land, you typically make a down payment of 20% to 35% for a serviced lot and 35% to 50% for raw land. Your land will also go as collateral, meaning you may lose it if you stop paying your loan.

Raw land requires a higher down payment, has higher interest rates, and is harder to get a loan for. You may need to go through a private lender in Ontario or an Ontario mortgage broker to get a land loan.

Some lenders, such as First National, consider land loans under commercial financing. This means they may require you to have a positive cash flow from other properties or cash reserves to be approved.

Depending on the purchase size, you may pay for the land using cash, a personal loan, a HELOC, or a combination of these. If you own a home, you may take a home equity line of credit to purchase the land.

You could also pay for the land purchase using a mortgage refinance on your current home, or you can get a second mortgage on your home.

Seller financing, or owner financing, is when the seller of the land acts as a lender. You will purchase the land from them by making a down payment, and then you will make loan payments to the seller just like you would make mortgage payments to a bank.

Zoning controls how the land can be used and what buildings can be constructed. For example, if you purchase land that is zoned for agricultural purposes, then the land will need to be primarily dedicated to agriculture. You can request a zoning bylaw amendment or rezoning; however, it is a lengthy process with no guarantee of approval. You will also need to get a building permit from your municipality.

Zoning is not the only layer of control. In south-central Ontario, a parcel may also sit inside the Greenbelt Plan, the Oak Ridges Moraine Conservation Plan, or the Niagara Escarpment Plan, which identify where major urbanization is not to occur. A lot can be zoned for a use the overlying plan does not allow, so check the designation before you buy.

Most of southern Ontario falls within a conservation authority's jurisdiction. Under Ontario Regulation 41/24, you need a permit before developing in a regulated area, which generally covers work in or near a watercourse, wetland, floodplain, or slope hazard. Authorities publish approximate mapping, so contact yours directly before making an offer.

You will need a land survey to determine the boundary of the land lot, easements, restrictive covenants, and any structures or features in the lot.

For raw land or land that doesn’t have existing road access, building a private road extension or driveway to access your property may require going through the property of other privately owned land. You may also consider paving an existing gravel road. Having gas, phone, and power lines run to your home can be costly.

If a local municipality doesn’t service your property, you may need to construct a well and a septic system for water and sewage. A soil test (percolation test) will be needed to see if the ground of your property is suitable for the construction of a septic system.

You could use a construction loan to finance your home's construction. If you purchase a lot from a subdivision, you might be required to use their builder.

The cost of developing your property will depend on your land, such as removing trees and brush to prepare for construction. If it is a heavily wooded lot, lot clearing can be a significant expense.

Not all land can be developed. Land lots might have conditions and restrictions on the land title, which may prevent the construction of any buildings or prohibit specific land uses. This is called restrictive covenants. Restrictive covenants are attached to the title, meaning they will be passed along to you during the land sale. A restrictive covenant registered with no fixed expiry date is deemed to expire 40 years after registration under section 119(9) of the Land Titles Act. A covenant that sets its own longer term, as well as certain conservation and heritage covenants, are not caught by this rule, and under the Registry Act, a notice of claim can extend a covenant for a further 40 years, so check the title rather than assuming an old covenant has lapsed.

You will need to pay Ontario land transfer tax when you purchase the land, and you’ll also need to pay Ontario property taxes even if you haven’t built a home on the land yet. Some municipalities may have lower property taxes for vacant land.

Yes, and vacant land is one of the few property types a foreign national can buy with few restrictions.

Canada's foreign buyer ban carved vacant land out of its scope in March 2023, even where the land is zoned residential or mixed use. The Act is scheduled to expire on January 1, 2027, and Ottawa is reviewing what replaces it, so confirm the framework in effect on your closing date; however, land has sat outside the restriction throughout.

Ontario's Non-Resident Speculation Tax applies only to designated land, meaning land that contains one to six single-family residences. A bare lot with no residence on it falls outside that definition, so the tax does not apply regardless of the rate in effect. Cottages and cabins do count as single-family residences, so a wooded lot with an existing cabin is taxable, currently at 25% provincially plus a further 10% in Toronto.

There are plenty of places to buy a cottage in Ontario, but did you know you can build one on Crown land in Ontario? Ontario only allows Crown land to be used for cottage lots if the land is located within the boundary of a municipality, and the municipality will need to request the disposition of the land to be used for cottages. Crown land can only be used if private land is not available. Ontario generally does not allow Crown land for cottage development on lake trout lakes or where the land has cultural value. Limited exceptions exist, including where there is adequate lakeshore development capacity on put-grow-take lake trout lakes. The process for being granted disposition to use Crown land can be lengthy, and the applicant must get the approval process rolling.