B1.1 Residential energy performance ratings *
Require energy performance ratings and disclosures for homes at time of sale, lease, or rent so that owners, tenants, and prospective buyers are informed before making purchasing or rental decisions.
The local jurisdictions are working on a plan to require Home Energy Scores for residences before they are listed for sale. Scores would use the assets and infrastructure of homes to estimate their energy use/costs and provide recommendations to cost-effectively improve their efficiency. This information would allow prospective homebuyers to consider the home’s energy burden as part of their purchase decision and financing. Staff expect to complete a model ordinance for consideration early in 2025.
Currently, RCW 64.06.020 provides a detailed form for seller’s disclosures required as part of residential real estate transactions. A recent study compares the sales prices and efficiency investments of homes in Austin, which requires disclosure of an energy report by sellers, with those of similar homes outside the city limits. It concludes that the requirement is correlated with increases in the sales prices of relatively efficient homes by $2,000 to $5,000, with a 31% increase in investments in efficiency by home sellers and about a 12% increase by home buyers, and with even larger increases in the types of investments that are specifically noted on the program’s audit reports.
Beginning in 2018, the City of Portland required sellers of single-family homes to obtain and disclose a Home Energy Report. The report includes information such as estimated annual energy use, annual generation for renewable energy, and annual utility costs. Home sellers that are found to be out of compliance are fined $500. The Home Energy Score is valid for 8 years, or after an alteration or remodel that affects the heated square footage, insulation, HVAC equipment, or other changes that are expected to impact energy use. Residents at or below 80% of the city’s annual median income are eligible for free scores. (The ACEEE says Federal funds could be used to provide these.) To date over 20,000 homes have disclosed Home Energy Reports. Portland also requires MLS listings to display an efficiency rating – a recent study by the ACEEE concludes buyers are significantly more likely to click on a listing for a home if it’s shown as more energy efficient in a listing. A recent study on lessons learned in implementing Portland and Berkeley’s programs stresses the importance of collaboration with real estate agents in developing a program to avoid problems like a shortage of certified raters, and the value of early disclosure to buyers who may want to roll the cost of efficiency upgardes into their mortgages. (There’s a similar MLS listing proposal in Massachusetts. Chicago requires realtors to disclose residential gas and electric costs when a single family or two to four unit home is on a multiple listing service, but those are affected by a lot of variables like how many people are in the house and how they behave that don’t affect the rating systems…)
The Rocky Mountain Institute worked with 22 cities developing home energy labeling policies; the program covered best practices, equity, stakeholder engagement, data considerations, compliance, and enforcement strategies. Other cities can now access the content, resources, tools, and discussion forum from their program, including policy blueprints, the workshop content and recordings, and other resources.
The U.S. Department of Energy developed the Home Energy Score in 2012. Home energy efficiency is scored from 1 to 10 based on the building envelope and HVAC equipment, and gives recommendations for cost-effective improvement to lower annual energy use. A number of municipalities and utilities have used the Home Energy Score as a model for their own energy rating programs. Ann Arbor requires these when homes are listed, but the City will provide a free assessment.
The American Council for an Energy Efficient Economy’s policy brief, “Home Energy Efficiency Policies: Ratings, Assessments, Labels, and Disclosure”, has detailed discussions of several case studies; they have also published Residential Energy Use Disclosure: A Guide for Policymakers. BuildingRating.org is “an international exchange for information on building rating policies and programs.”
Austin Energy has a nice required disclosure form for tenants considering a rental.