CAPTIJN: Want to sell more new homes? Listen to consumers

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The late Anthony Bourdain, celebrity chef and world traveller, left us with some thought-provoking quotes, not only about food, but about people. One of them applies to many human interactions: “I don’t have to agree with you, to like you or respect you.”

Listening to each other’s perspectives can bring about positive change. When governments and their policymakers shut out key stakeholders from policy discussions, or conceal their feedback, that doesn’t make better policy. We don’t have to agree, but we have to talk.

Why are buyers and potential buyers often excluded from policy discussions about housing, especially on consumer protection issues in new homes sales? We often hear from industry executives, lobbyists, and professional organizations, who have the loudest microphones at Queen’s Park where policy is made. But who speaks for the home buyer?

Media discussions on housing often don’t include consumers, either. An annual real estate roundtable in a local Toronto magazine omits the main stakeholder, the consumer. Instead, we hear from city planners, real estate agents, developers, and financial advisers.

The two government agencies in charge of new home buyer protection, Tarion and the Home Construction Regulatory Authority (HCRA), say their executives are all consumers and homeowners, so they can speak for homebuyers. They say builders are the best consumer advocates.

Can we once and for all agree this is nonsense? Builders don’t speak for homebuyers, any more than homebuyers speak for builders.

At the HCRA/Tarion annual public meetings, consumer questions are limited to about 20 minutes, and it’s forbidden to raise issues about individual files. Many consumer advocates have been blocked on social media by these two agencies, who say their mission is consumer protection.

A very important topic which has been swept under the rug by two successive governments is whether Ontario should offer choice in new home warranties, or whether Tarion should remain the sole administrator of the builder’s warranty, but not provide a warranty itself.

This question was studied by an experienced judge in a year-long, broad-consultation review in 2016-17. The judge’s main recommendation? Give Ontario choice in warranty providers and end the Tarion monopoly.

Consumers and consumer advocates agreed.

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But this major policy recommendation was quickly swept aside by the Liberal government in 2017; the consumer ministry ruled the topic of competition in warranty providers out of scope in a consultation group they set up in the summer of 2017. The participants were stacked with industry and Tarion executives.

Only one consumer advocate was included, and all participants had to sign a confidentiality agreement.

A strange way to proceed if you want to make good consumer policy.

The Ford government’s MPPs supported competition in warranty providers while in Opposition, but did a flip-flop once they got elected. Premier Doug Ford has said he’s against monopolies, but ignored the judge’s recommendation to end Tarion’s monopoly. He’s focused instead on ending the beer monopoly.

New home warranties are “not a natural monopoly,” stated the judge’s review. Utilities are, since they have to provide expensive infrastructure, and most competitors can’t afford this.

Having competition in service providers usually increases innovation and customer service, whereas monopolies have little incentive to improve. It took the Tarion monopoly over a decade to increase the warranty coverage maximum to keep pace with rising cost of new homes. A competitive model could have hastened that improvement.

The judge’s key recommendation in the review was that warranty coverage would “move from today’s monopoly, with Tarion as the only provider, to a multi-provider insurance system. The warranty coverage should be an insurance product….” [to deliver] “financial sector oversight and accountability.”

It’s concerning that the PC government has continued to ignore this advice, and has hidden its reasons for doing so, citing secret “cabinet deliberations.”

On other consumer protection topics, it’s taken too long for the government to act on simple things like a 10-day, cooling-off period for new freehold homes, which has for years been the law for condo purchases. Still, no action on deposit protection for freehold purchases, as there is for condos.

It’s taken too long for the government to ban NOSIs — Notices of Security Interest — which are notices, for example, relating to leased furnaces, placed on a home’s record at the Registry Office, without notifying the homeowner.

There is apparently over $1 billion value in these notices on home records in Ontario. Why has this been allowed to go on for so long? There appears to be no voice for homeowner rights at Queen’s Park; we seem to have to wait for professional organizations, corporations, lawyers, or the media, to push the government to action.

What about long-awaited reforms to the confusing, outdated Addendum, which all new home buyers have to sign with the home purchase? It’s a 12-page, fine print Tarion/HCRA mandatory document, full of pitfalls for consumers. No action.

It’s been quiet for years on the topic of a standard contract for pre-construction home sales. There’s a simple, six-page standard contract for re-sale homes, yet we’re stuck with complex, 40-plus pages long, developer-written contracts for new homes.

Without listening to, respecting, and properly disclosing consumer feedback, there won’t be much progress in new home buyer protection.

With new home sales currently falling, policymakers are looking for ways to breathe new confidence into the market.

Want to sell more new homes? Listen to consumers, and fix this broken system.

— Barbara Captijn is a consumer advocate and can be reached online at Reform Tarion.