Op Ed: Homebuyers Need Better Protection
Monday, June 11th 2012 9:43:02am
Many people looking for a place to live are being hit with sticker shock. Prices for condos and houses continue to rise across the province, often leaving buyers struggling to make their mortgage payments. Imagine their shock when they get hit with a ‘second bill’ for their purchase, the cost of the energy their home consumes.
That ‘second bill’ can add up to a lot. The most recent Statistics Canada data (2009) shows the ‘average’ Ontario household spent $2500 a year on fuel, electricity, and water, but some buyers will learn to their dismay that their houses are far from average. Differences in technology, building materials, and construction practices mean that houses vary widely in their energy consumption, and houses that use more than twice the average are not uncommon.
I recently released my Annual Energy Conservation Progress Report that tracks Ontario’s efforts to conserve energy. The 2011 report is an in-depth look at the government’s conservation promises contained in the Green Energy Act (GEA), passed three years ago. One of the statutory commitments that will be familiar to homeowners is the requirement for home energy information – an energy audit or rating – at the time of sale of a property. This audit, along with tough efficiency standards for appliances and a ban on inefficient light bulbs, was part of the government’s plan to encourage what it called a ‘culture of conservation’.
Three years ago, it looked like the government would give potential homebuyers the information they need to find out whether their new homes are energy efficient, or energy sieves that leak heat from windows, doors and poorly insulated walls and roofs. Despite revisions to the legislation to accommodate realtors’ concerns, the government still has not acted. Instead of fostering a culture of conservation, the Province has left that culture more of an orphan, and the mandatory home energy audit was the first of the Act’s promises to be abandoned.
An energy rating recognizes that high efficiency houses should be worth more. By contrast energy sieves should have a lower value because they mean high energy bills year-after-year. They should be worth less to reflect that ‘second bill’ – the higher annual operating costs that the unfortunate owner will incur. An energy rating would alert buyers to this and let them factor this into their purchase decision. It would also provide people with assurance that they could recover any investment in efficiency upgrades with a higher resale value when they sell.
As Environmental Commissioner, I believe the public interest is not being served by this inaction on home energy audits. Consumers’ interests are being harmed by the lack of transparency related to energy use in the home. The government’s stalling is puzzling. At the same time the GEA was passed, legislation called the Energy Consumer Protection Act was created. According to the government, this Act’s purpose is to protect consumers when they sign a natural gas or electricity contract for their home by providing transparency through cost comparisons and plain language disclosure. The government requires such disclosure by home energy retailers but not for the purchase of the home itself.
Other jurisdictions are willing to protect homebuyers. The European Union requires its member states to create mandatory energy labelling and disclosure laws. Austin, Texas requires an energy audit be done prior to a purchase, and the capital region of Australia requires energy disclosure for all existing homes at the time of sale.
So until the Ontario government requires sellers to provide homebuyers with the energy efficiency information they need, it’s left to you, the prospective purchaser, to ask the important questions. You can start by letting your realtor know that having information on a house’s energy consumption is a high priority for you. If you want the most detailed information, schedule an energy audit by a professional. The audit cost is quickly negated by the on-going energy savings realized by choosing a home with a better energy rating.
Mandating home energy audits prior to sale would protect consumers and the environment. The government needs to find the courage to act in the interest of consumers. If the Minister of Energy won’t do it, maybe it’s time for the Minister of Consumer Services to get involved. It’s fine to talk about a culture of conservation but who will provide the legislation so that the values and behaviours of such a culture are widely shared by its members?
Gord Miller is the Environmental Commissioner of Ontario, the province’s independent environmental watchdog appointed by the Legislative Assembly. The Commissioner monitors and reports on compliance with the Environmental Bill of Rights, the government’s progress in reducing greenhouse gas emissions and its actions to achieve greater energy conservation in Ontario.