Starting from Jan. 1 of this year, owners of one or two unit houses are legally required to complete emissions-reducing upgrades to their houses during a sale, funded by either the seller or the buyer. Berkeley is the first city in the nation to implement a policy mandating environmental upgrades for home sales.
This requirement stems from changes made by the Berkeley City Council to the city’s Building Emissions Saving Ordinance last year. The policy previously required owners of one or two unit houses to only complete assessments determining the best ways to save energy.
The ordinance is Berkeley’s main policy aimed at reducing energy emissions from buildings, the second largest source of emissions in the city, according to Berkeley sustainability program coordinator Ammon Reagan. The policy is a response to the city’s goal to achieve net-zero emissions by 2045.
Though the policy mandates energy assessments for all types of buildings, ranging from houses to large commercial buildings, its lack of a mandate on installing emissions-reducing upgrades meant that only about 2-3% of homeowners actually made the necessary changes to their property.
“When BESO started (in 2015), for a small residential building to a building less than 25,000 square feet, it required an energy assessment at time of sale,” Reagan said. “Over the last 10 years we have had BESO, not a lot of building owners were taking action and reducing emissions … so that led us to the development of new requirements for time of sale for small residential buildings.”
The change that went into effect this year mandated homeowners reach the resilience standard of 6 credits in the event of a sale. To meet the standard, owners must complete emissions-reducing upgrades in order to reach the necessary six credits, with each upgrade granting varying amounts. These include installing a heat pump water heater, solar panels or wall insulation.
These upgrades can either be completed by home sellers before a sale or deferred to buyers, who would have $5,000 and two years to complete them. Half of the $5,000 will come from the buyer and the other half from the seller. Exemptions can be achieved if the house already possesses an electric pump water heater or heat pump HVAC system, among other improvements.
The City Council also extended the mandate on installing emissions-reducing upgrades to owners of three or more unit houses, which will go into effect starting 2028.
According to Reagan, the city has already certified 64 completed or exempted projects and received 105 deposits since the beginning of the year.
“(The change) only affects smaller residential buildings because … 70% of our sales every year are in that one- to four-unit category,” Reagan said. “The policy is focusing on the bulk of our sales that are going on.”
Berkeley realtor Spencer Hsu said he believes that the change will make buying a house more expensive.
He believes that since many emissions-reducing upgrades take years before demonstrating economic savings, the change is likely to negatively impact the purchase and sale of housing in Berkeley.
“At the end of the day, existing homeowners don’t really have much of a choice; this becomes more of a cost to sell that they didn’t have before,” Hsu said. “For a buyer, they have to be mindful that the cost may be passed to them, or there may be a further cost down the road.”