When buying a home in the Canadian real estate market, many commonly assume that the bulk of the cost is for the home, but in reality, it is the land on which the house is built that is of the most value.
The housing market is all about the land since it is ostensibly finite, especially in hyper-dense cities. While Canada is one of the largest countries in the world by land mass, and there are still plenty of development opportunities for buying vacant land from coast to coast, it is also one of the most expensive markets on the planet.
Still, using vacant land to construct a new home can be a worthwhile pursuit. However, whether you are buying vacant land in Ontario or buying vacant land on the outskirts of Saskatchewan, the process is entirely different from purchasing a conventional home.
So, what do you need to know?
A Complete Guide to Buying Land in Canada
First, it is important to note that there are two types of land:
Raw: Raw land is the type of land that has not been developed before, meaning the conventional components of a property, like utilities and infrastructure, are absent.
Vacant: Land with no buildings or structures. It can include sites where a building was demolished. Services may still be present at or near the property line.
Here’s what you should know when purchasing vacant land in the Canadian real estate market:
How to Buy Land in Canada
Set Your Budget and Financing
Decide what you can spend on land, due diligence and early site work, then add a cushion for build or improvements. Price a HELOC, private lending or vendor financing if banks push back. Map cash flow for deposits, reports and staged payments. Keep 10 to 15 percent in reserve for surprises. Buying land in Canada starts with a clear ceiling. Construction mortgages pay in stages as you build, and some lenders let the first draw cover part of the land cost.
Common loan types include:
- Land Mortgage: Used to buy the land itself.
- Construction Mortgage: Used to acquire the land and build on it in stages.
- Agricultural Loan: If the land is for farming, you can apply for programs like the Canadian Agricultural Loans Act (CALA).
Choose Province, Region, and Micro-Location
Pick areas with strong access, nearby services and signs of growth. Study commute times, hospital distance and school catchments if resale matters. Review municipal plans for roads or plants that lift values. This matters when buying vacant land in Ontario.
Pre-Screen Lots Before You Drive Out
Filter listings with municipal GIS, street view and satellite imagery. Drop parcels with unclear access or conservation flags. Track price per acre and seasonal road limits. Build a simple scorecard so you can compare like-for-like. Check snow loads and slopes when buying land in BC.
Build Your Team Early
Hire a land-focused agent, real estate lawyer, surveyor, well and septic pros and a builder who quotes in writing. Call planning and conservation to confirm process and timelines. Ask for fee schedules and typical delays. Strong partners cut risk when buying land.
Confirm Zoning and Permitted Uses
Get the zoning bylaw and official plan from the planning desk. Verify minimum lot size, frontage, setbacks, dwelling types, RV or mobile-home rules and short-term rental limits. Do not rely on listing remarks without proof. Ask about garden suites and secondary units. In Ontario, many low-density lots allow up to three residential units as of right. These rules shape how you buy land in Ontario.
Verify Legal Access and Year-Round Entry
Confirm a public-maintained road or a registered right-of-way. Learn who maintains the road and the annual cost. Review title for easements that limit build areas. Land without legal access hurts financing, insurance and resale. Secure proof before you buy land.
Assess Utilities and Service Options
Map nearby power and price the extension per metre. Check internet types and speeds. Plan water and wastewater with a well yield test and a septic perc test. Price off-grid power if lines are far. Utility distances can make it hard to buy cheap land.
Check Site Constraints and Risks
Screen floodplain, wetlands, steep slopes, shallow bedrock and sensitive habitats. Order a basic geotechnical review for foundation assumptions. Run a Phase I environmental review if prior industrial or farm use exists. The cheapest land to buy in Canada can still face heavy controls. Record findings in your budget sheet.
Get a Current Survey
Obtain or order a recent survey. Flag corners and walk the lines. Look for encroachments, shared driveways and setback conflicts. Match the survey to aerials and legal descriptions. A clean survey protects you when you buy land in Canada.
Price the Total Project
Add clearing, driveway, culvert, grading, well, septic, power, permits, design and contingency. Build low, base and high scenarios and compare lots by total cost, not price per acre alone. Factor in road bans and site work if buying land in Alberta.
Write a Smart, Conditioned Offer
Use conditions for financing, survey, zoning confirmation, well and septic tests, environmental review and legal road access. Give enough time to complete reports without rushing. Attach a simple site sketch to align expectations. Set clear deliverables for sellers, like providing old surveys or permits.
Plan Closing and Carrying Costs
Budget legal fees, title insurance, land transfer costs or registration fees, surveys and development charges. Most provinces charge a land transfer tax. Alberta and Saskatchewan use lower registration fees instead. Confirm whether GST or HST applies. Many sales by individuals are exempt, but business use or subdividing into more than two parts can trigger tax. In Ontario’s unincorporated areas, a Provincial Land Tax applies. Call the municipality for exact fee schedules. Make sure you can carry costs if the build waits.
Prep Your Build and Permit Path
Book a pre-consult with planning and building. Line up drawings, grading and energy code items. Lock quotes for key trades and materials and set dates with penalties for misses. Map monthly tasks to break ground on time. Keep a buffer for weather and supply delays.
An Investment Opportunity
Buying vacant land can be a tremendous investment opportunity to generate steady income or save for retirement. Depending on where you live, there are many ways to utilize this land, from operating it as a rental property to using it for commercial purposes. Indeed, one of the key advantages of buying vacant land is that you can decide what you want to do with it.
Simple ways to make money from vacant land include:
- Lease pasture for hay or grazing. Use a simple month-to-month agreement.
- Rent RV or boat storage on a gravel pad. Charge per spot per month.
- Offer a contractor laydown yard during nearby builds. Set 3 to 12-month terms.
- Run event or overflow parking near busy venues or trails. Collect with QR payments.
- Sell seasonal garden plots to locals. Provide a water tote and compost.
Natural Disasters
Canada’s remote areas are more prone to natural disasters than jurisdictions closer to city centres. Some of these regions will see flooding, forest fires, tornadoes, and severe snowstorms. This can be harder to handle when you live in an unpopulated part of the country. Therefore, it is imperative not to have vacant land that is more vulnerable to these devastating events since it could threaten life, and the property might not be insured.
How the Vacant Land Is Valued
Industry experts note that there are several mechanisms to determine how the vacant land is valued:
- Access to roads and other public infrastructure.
- Size of the lot. Indeed, whether you buy land in Ontario with utilities or cheap land on a large lot with no utilities, the valuations will differ.
- Proximity to the utilities. How will you develop the land without enough electricity?
- The designation of your property: Is it raw or vacant?
FAQs About Buying Land in Canada
Do I own minerals and timber on my lot?
Ownership can split between surface, minerals and timber. The Crown may reserve mines and minerals on title. Ask your lawyer for a full title search and copies of all reservations. Get written confirmation on timber rights and harvesting rules. In Ontario, many titles reserve mines and minerals to the Crown.
Could Indigenous consultation or archaeology delay my build?
Some parcels trigger heritage studies before permits. Sites near water or mapped artifacts often need assessments and seasonal fieldwork. The Crown leads the consultation, but you fund the reports. Ask planning which studies apply and how long they take. Include this in your plan when buying land in Canada. Budget time and cost.
Why do bargain parcels hide big environmental risks?
Low prices often trace to wetlands, floodplain or habitat limits. Setbacks and mitigation can shrink your buildable area and add months. Check flood maps, conservation layers and species records before you commit. Order a Phase I environmental review if any risk appears. Costs can rise fast when you try to buy cheap land. Do deeper checks when reviewing the cheapest land to buy in Canada.
How are profits on land taxed when you sell?
Profits are taxed as either a capital gain or business income. If you buy and hold passively, it is usually a capital gain, and only 50 percent is taxable. If you subdivide, add services, market or flip, the Canada Revenue Agency may treat it as business income, and 100 percent is taxable. The principal residence break rarely applies to vacant land unless a home sits on it and you designate it. Keep receipts for surveys, permits, legal and selling costs to raise your adjusted cost base. Plan this before you buy land in Canada and get written advice.
Exceptional Investment Opportunities
Ultimately, purchasing vacant land is an exceptional investment opportunity. You do not need to worry about crumbling homes, deteriorating infrastructure, or rotting wood. That said, buying vacant land in Ontario, for example, is an affordable real estate investment that does demand enough due diligence, research, and time. Once you buy cheap land and have it in your name, it is your choice of what to do with it. Do you want to develop it? Do you want to build on it? Are you speculating?
Building a home, farm, or commercial property from scratch can offer immense opportunities. Everything is new, and you can design it the way you want. It is truly an incredible feeling.
