Content courtesy of PEMBINA institute

Deep retrofits are essential across Canada for meeting climate targets and ensuring homes are healthy, climate-safe, and affordable to heat and cool. However, energy-efficient buildings can create conflicts between residents and building owners. In rental properties, owners fund deep retrofits, but residents typically reap the benefits, such as lower utility bills and improved health outcomes, leading to a split incentive. This dynamic reduces owners’ motivation to invest in these projects, while residents fear rent hikes or renovictions.

This split incentive delays crucial retrofits needed for climate-safe and affordable buildings. Addressing both owners’ and residents’ concerns is vital to overcoming this issue. The Pembina Institute, in partnership with CityHive, surveyed Metro Vancouver building owners and residents to understand their views on deep retrofits. Findings showed residents support retrofits but worry about affordability impacts, while owners are deterred by high costs and uncertain returns. Both groups, however, value benefits like improved air quality and reduced carbon emissions.

Solving the split incentive challenge requires collaboration between residents and landlords. The Pembina Institute is exploring solutions such as setting joint performance objectives, participating in incentive programs, and considering alternative financing like green leasing. Retrofitting multi-unit residential buildings is crucial for a healthy, climate-safe, and affordable housing stock in Canada. Meaningful consultation with both parties will help maximize benefits and minimize costs.

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