Earth Advantage is pleased to announce the availability of a new report titled
Mending the Split: Pathways for Home Energy Score Disclosure for Rental Housing in Oregon. Generously supported by the Oregon Department of Energy (ODOE), the report examines how renter households could benefit from Home Energy Score™ disclosure policies and provides local governments with recommendations for how to provide these benefits.
In the rental housing market, property owners are disincentivized from making home energy upgrades that save renters money on energy bills. Often called the “split-incentive” problem, energy upgrades require property owners to pay capital costs but do not benefit them with savings, comfort, or market recognition. Data shows that Oregon renters are more likely to have lower incomes, be racial minorities, live in homes with less efficient features, and experience challenges accessing energy efficiency programs than homeowners.
Requiring DOE’s Home Energy Score – which has updates to include housing units in low-rise multifamily buildings – in rental listings can help rectify the split incentive by enabling them to make more informed decisions about where to live, clarifying the benefits of energy efficiency, and creating incentives for landlords to invest in the energy efficiency of their buildings.
Oregon is a national leader in home energy labeling by supporting Home Energy Score disclosure in real estate listings. As a result of these efforts, more than 45,000 Home Energy Scores have been generated in Oregon, representing nearly 5% of the state’s owner-occupied housing units. Most of these Scores have been delivered through municipal ordinances requiring Home Energy Score disclosure in real estate listings – policies currently in place in Portland, Hillsboro, Bend, and Milwaukie. These policies help empower homeowners to make upgrades that improve their home’s energy efficiency and reduce energy costs. However, existing Home Energy Score policies do not provide benefits to the hundreds of thousands of Oregonians living in rental housing.
Home Energy Score disclosure in rental home listings can create incentive for property owners to implement energy efficiency improvements that improve the listing by decreasing disclosed energy costs. When energy cost information is hidden from the prospective tenant, landlords choose other investments that may improve rentability and vacancy rates, such as fresh paint or upgraded flooring. These investments increase costs without causing any offset in operational or other housing costs. Even if a property owner seeks to recoup their efficiency investment through rent, requiring disclosure of estimated home energy costs within the listing mitigates risk of efficiency improvements being overvalued through rent increases. If a landlord completes an upgrade and increases rent, Home Energy Score disclosure will empower renters to know if the rent increase is disproportionate to the estimated decrease in energy bills.
Oregon can continue its leadership in Home Energy Score policies by updating them to include rental housing. In doing so, governments can make sure their lowest-income and highest-energy-burdened households benefit from access to energy efficiency and cost information to inform their rental decisions.
Read the full paper, including recommendations for cities interested in expanding their Home Energy Score policies, here.
About Earth Advantage
Earth Advantage is a non-profit organization helping to advance a more informed and humane housing market. We work to ensure the US housing market recognizes the elements of homes that create climate risk and values the characteristics of homes that provide climate solutions. Our teams partner with entities across the country to develop tangible, systemic solutions for climate-friendly housing.
