Forcing energy audits on sellers is both inefficient and problematic
By Vince Brescia
To many people, the Ontario government’s recent announcement that all homes must have an energy audit before being sold must sound like a good idea. In fact, the legislation states that an energy audit is required prior to all real property transactions, including leases. So much the better, some may say.
The legislation does not actually specify that an independent audit is required. That intention was announced by the government, and would have to be spelled out in regulations. The legislation actually specifies that sellers must provide “information, reports or ratings” on “energy consumption and efficiency.” The government says the audits should cost about $300. However, a province-wide audit infrastructure does not yet exist so the market price for audits once they are in demand is yet to be determined.
There are certainly positive aspects to mandatory audits. Everyone who buys a home will get some information on the energy efficiency of the home (property) they are buying. It will increase consumers’ awareness about this aspect of real estate. And it will incent some potential sellers to take steps to improve the energy efficiency of their properties.
However, forcing energy audits on sellers is both inefficient and problematic.
Firstly, not all purchasers will want or make us of this service, regardless of whether or not some think they should have it. The intent of the legislation is to provide value to purchasers. However, energy efficiency may not be a priority for the purchaser, because they are interested in the property for other reasons. Therefore, the expense will be wasted in many circumstances, making it inefficient.
A second problem is that the scheme will create a considerable amount of energy consumption. There are about 460,000 real estate transactions in Ontario every year. Most audits will require a return truck or van trip by auditors to each property, consuming energy. The infrastructure of a bourgeoning home audit industry will also generate significant energy consumption.
A third problem is that many homes (properties) do not really need an audit. If they are relatively new homes, they will have had to meet building code standards for energy efficiency, making the information provided of little use to the buyer. Another example is condominiums, where neither buyer nor seller has much control over the energy efficiency of the condominium unit. In condominiums, the main parts of the infrastructure that determine energy efficiency are controlled by the condominium corporation, not the unit owner.


