Written by Jim Adair

The Ontario Real Estate Association (OREA) says the provincial government is moving forward with a plan that would require an energy audit to be part of every property listing.

OREA says the Ministry of Energy is “exploring an enforcement regime which would make the Realtor responsible for ensuring that the audit was completed and posted to MLS.”

OREA adds, “In essence, the province is actively considering mandating requirements on the MLS.”

 The idea of making mandatory energy audits part of every home sale has been on the government’s radar for many years. The Energy Conservation Leadership Act, 2006, gave the province the ability to require people who are selling, leasing or transferring property to provide energy-related information. Two years later, a private member’s bill proposed a mandatory Home Energy Rating Report that would be provided to people purchasing or leasing houses and low-rise residential buildings.

The 2006 act was replaced in 2009 with the Green Energy Act, which included a provision that would require “information, reports or ratings” at the time of sale or lease. After public consultation, amendments were made that would allow home buyers to waive the right to receive the energy information, and excluded leased buildings. The provision that requires mandatory energy disclosure required a proclamation before it came into force. OREA says that its advocacy efforts have so far been successful and the provision is still an unproclaimed piece of legislation.

However, in May 2015 OREA was informed that the ministry was planning to go ahead with a new plan for mandatory energy audits, which shifts the time when the audit is required to prior to the listing appearing on the MLS.

“Ontario Realtors are extremely concerned about the mandatory aspects of the proposal and any attempt to legislate real estate listing services in Ontario,” says OREA. “Realtors believe that mandatory home energy audits are unfair, will put consumers at risk, hurt the housing market and will do little to curb greenhouse gas emissions.”

In 2012 Gord Miller, then the Environmental Commissioner of Ontario (ECO) wrote, “Despite years of voluntary programs, the real estate market has failed to serve the public interest by providing needed information on a home’s energy use. The ECO believes mandatory home energy labels are necessary to increase residential energy awareness and provide home buyers with the necessary information to factor environmental and operating energy costs into an assessment of the home’s value.”

Miller wrote, “Real estate agents made little use of the Multiple Listing Service to promote such literacy and assist home purchasers. Mandatory labelling of houses at time of sale would overcome the asymmetry of knowledge that exists between the buyer and seller of a home. Labelling would also confirm that the construction of efficient new or retrofitting of existing houses increases home asset values. In other words, it raises home equity.”

OREA is proposing that instead of mandatory audits prior to the listing, the audits should be included within a standard home inspection. “This would ensure that the majority of home buyers have access to important home energy efficiency information when they are making an offer on a property,” says the association. This will lower the costs of the program and be easier for the province to implement, while protecting consumers, it says.

The Ontario Home Builders’ Association (OHBA) has supported the idea of mandatory energy audits since the 2009 act came into place, as long as new homes are excluded. The association says the current building code already mandates that residential buildings must meet certain energy performance levels, so the “the idea of labelling new homes is redundant for the new home consumer,” says the association.

“OHBA has been consistent in our support of energy labelling of resale homes since the introduction of the Green Energy Act, as we see it as an extension of important and necessary disclosure when determining housing options,” it says.

Miller, who left the ECO post in 2015, wrote in a blog post two years ago: “When we buy a car, we expect to know how far it will take us on one tank of gas and how much that gas will cost us. It’s about time we expect the same of our homes….By promoting transparency in the true cost of a home after purchase, we are getting closer to integrating environmental protection and home operating costs with property values…Research shows that energy efficient homes sell for up to nine times more than homes which are energy hogs.”

Miller was referring to a 2012 study, The Value of Green Labels in the California Housing Market.

OREA says it will continue to fight the introduction of the mandatory energy labelling on property listings.