Green Energy and Green Economy Act to Lose Mandatory Home Energy Audits

Real Estate Sales Representative with iPro Realty Ltd., Brokerage

Facing public opposition from consumers and the real estate industry, it appears the Province of Ontario is going to backdown on its plan to require mandatory home energy audits on the sale of homes.

As I blogged earlier, while this facet of the Act was well intentioned, the Energuide rating systems used in Canadian home energy audits has technical complexities and assumptions that  make it a poor measure or comparison tool of a home's operational costs.

Last week, Pauline Aunger, president of the Ontario Real Estate Association, spoke to the Standing Committee on General Government:

First, let us look at the costs. Home sellers will first pay some $350 to $500 to obtain a home energy audit. It's an unnecessary fee because it provides very little information beyond a highly subjective number. But that's not the real problem. The real problem is that few homes will receive positive ratings, and those with less-than-ideal energy ratings will face pressure from homebuyers to either spend thousands of dollars to improve the energy efficiency of their home or lower their sale price.

For a moment, let's assume that a homeowner sells his home for $10,000 less than the original asking price based on the results of a home energy audit. Bill 150 presumes that homebuyers will use these savings to invest in improvements to the energy efficiency of their newly purchased home. I have been a realtor for over 30 years, and I can say with certainty that the overwhelming majority of homebuyers will not invest in new energy-efficient furnaces, wall insulation or solar water heaters. Instead, buyers tend to customize their recent purchase by investing in things like kitchen renovations, new furniture and other cosmetic alterations.

If the ultimate goal of mandatory home energy audits is to improve the energy efficiency of the housing stock of Ontario, then the government should expand its successful rebate program, not pass laws that won't work.

OREA is also concerned that mandatory home energy audits unfairly target single-family homeowners. Although subsection 2(1) of the bill is broad in terms of its application, OREA has learned that mandatory home energy audits will apply only to single-family homes. The fact that the government has chosen to place the burden of mandatory home energy audits directly on homeowners is extremely concerning to Ontario realtors. This design ensures that while all Ontarians contribute to our pollution problem and share in the benefits of going green, owners of single-family homes will bear the majority of the costs. If a culture of conservation is indeed a public good, as the government has indicated, then we should all share in its cost, not just homeowners.

As well as having concerns about home energy audits' impact on homeowners and our economy, realtors have serious doubts about their reliability. For example, an investigative report by the Toronto Star on home energy audits received three different sets of energy ratings and three different lists of recommended retrofit renos, ranging from $5,000 to $25,000, all on the same house. Compare this lack of standards to the consistent results of testing used to produce energy ratings on cars and appliances, and you will find that trying to rate an individual home is a very subjective process. We believe that the results of home energy audits are too inconsistent to be legislated as a requirement in a real estate transaction.

Realtors are not alone in their opposition to mandatory home energy audits. In fact, we are now joined by one of the largest, most important groups in this province: Ontario's 2.5 million homeowners. An Ipsos Reid public opinion survey released on Monday shows that 65% of Ontario homeowners oppose a system of mandatory home energy audits. Indeed, 92% of homeowners favoured voluntary audits, as does the Ontario Real Estate Association. Furthermore, a massive majority of 94% of homeowners believe that mandatory home energy audits will impose significant costs on home sellers and first-time buyers.

In addition, the poll found that 70% of Ontario homeowners believe that mandatory home energy audits will deter them from selling their home, having a detrimental effect on the real estate sector and Ontario's economy. Not surprisingly, the majority of Ontario homeowners oppose mandatory home energy audits because they know that the audits will hurt the affordability of housing, add yet another brake on the economy and erode hard-earned home equity.

In her response, the MPP from Etobicoke-Lakeshore stated:

It would seem to me that type of information, combined with the fact that the audit is then transferable to the new purchaser, helps very much on a critical issue and a critical barrier to first-time buyers and entry into ownership, and that is the carrying costs associated with that home.

To be clear, only the information in the audit is transferable to the purchaser.  If the buyer wishes to carry out an ecoEnergy retrofit, the new owner must get a new pre-retrofit audit done, complete the work within 18 months, and obtain a post-retrofit audit to apply for the grant.

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