The EPA Renovation, Repair and Painting Law (RRP) will lead to a decline in Real Estate values on homes built before 1978.

You may have heard by now that any work on pre 1978 properties in America requires the use of lead safe practices under the EPA RRP Lead Rule. This regulation has lead to increased costs for legally operating contracting businesses. These costs are specific to homes built before 1978. Renovation on newer homes do not require these practices and costs.

Some background on the law

Any contractor who wishes to offer to work or work on pre 1978 homes must be Certified with the EPA and must be trained in the 8 hour EPA Initial Renovator curriculum. Contractors who fail to become compliant can be fined up to $37,500 per violation per day.

The EPA was suppose to educate the consumer but to date they have not done enough. Contractors throughout America report that most homeowners have little or no knowledge of this law.

The huge risk for homeowners is if they hire a contractor who is operating illegally they face the possibility of having the job shut down. Many contractors have been trained however there are thousands who have chosen not to become compliant. There are some parts of the country where contractors are not aware but that gap is being closed.

Contractors who use lead safe practices will in most cases be higher in cost than those who operate illegally. There are prescriptive practices that are mandated by the EPA that need to be included in the direct cost of the job. Some of these costs are for labor, documentation, increased insurance coverage and additional material and equipment to comply with the law.

Consumers looking to purchase a home built before 1978 are starting to figure the cost of renovating these homes with EPA RRP compliant work practices. Ultimately renovation costs on pre 1978 homes will be higher than those built after 1978. It will not be long before banks start figuring these costs into the value of a home and reduce the amount of money that they will allow in the loan to value evaluation. 

In essence, homes built before 1978 are now our most valuable declining asset! Coupled with the foreclosure debacle we are far away from seeing the bottom of the decline of real estate values.

Consumers looking to buy homes are getting smarter on negotiating the price of listed homes down. The government through the EPA RRP Lead Law has given them another tool to drive a hard bargain.

I predict the next hit Real Estate Values are about to take will come from new bank procedures leading to lower appraisal values of pre 1978 homes.

After banks get in on the game the insurance industry will start charging higher premiums to cover issues caused by lead and the EPA RRP Lead Rule.

For more information on this law we help homeowners and also can help you find a legal contractor who is compliant.

mark paskell