Throughout Ontario, there are many historic buildings, structures, districts and archeological sites. You may be considering one because of its old-world charm and historical legacy. While the heritage value of owning one of these structures is obvious, the practical value is a little less clear. Buying older houses in good locations has become popular for those intending to perform renovations and enjoy both the character of the home with modern amenities. Regardless of the structure type – old Victorian, mid-century ranch or colonial – you will need to understand the costs of maintaining and insuring an older home fully. In this article, we will clarify what qualifies as a heritage property, lay out some of the pros and cons to this type of investment and help you understand the relationship between heritage homes and home insurance.
What is a heritage home?
Heritage properties can include built resources, like historic houses, bridges, or heritage conservation districts and cultural heritage landscapes. Heritage also includes archaeological resources. The Ontario Heritage Act defines how a heritage home is identified, designated, protected and conserved. It also gives municipal councils the power to designate individual heritage properties and heritage conservation districts. This designation prohibits the demolition or removal of any building or structure and requires ministerial approval for alterations of the property.
The Ontario Heritage Act enables municipalities to designate properties of cultural heritage value or interest through a by-law.
Designation is a way for:
- Owners to express pride in the heritage value of their property
- The community to protect and promote awareness of its local history
Designation can apply to:
- Individual properties
- A whole neighbourhood or district
If a property or district is designated, it gains public recognition, as well as protection from demolition or unsympathetic alteration so that its heritage attributes can be preserved.
Factors that determine heritage status
Owning a heritage property is an investment in Canadian history. There are many factors that determine whether a property is considered ‘historic’ or not, including:
- Age of the home
- Architectural design and builder
- Historical significance
- Exterior condition
- Manner in which it was constructed
- Contribution to its landscape or streetscape
- Cultural value
- Occupants / previous owners
The pros of owning a heritage home
If you are a fan of HGTV, you are aware that owning a historic home often comes with its own set of benefits and challenges. Here’s a quick look at the pros of buying a historic home:
- Character and charm: From the ornate fireplaces to the intricate crown moulding, there are so many fun details to love about an older home.
- Stories to tell: In addition to the charming characteristics, a historic home houses its own interesting history.
- Preserving history: Purchasing a historic home translates into helping to keep history alive. Over time, it will require repairs and needed updates. Also, by adding an addition or renovating, you can make the home your own while preserving a part of its history at the same time.
- Unique architectural style: If a box home isn’t for you, you’ll enjoy living in a house with a distinct old-world style. Historic homes are often constructed in stunning architectural styles, including Mid-century, Georgian, Colonial, Federal, Victorian, Spanish and more.
- Location: Many of these homes are in well-established neighbourhoods that have grown around it.
- Price: They may have a lower selling price because of the condition.
- Lot size: Many older houses have larger lots compared to new builds.
- Financial potential: There is potential to increase the value once renovated.
The cons of owning a heritage home
- Repair costs: Replacement of windows, roof, wiring and other areas that do not meet current building code.
- Energy efficiency: Many of these buildings are not energy-efficient because they don’t have updates, which can lead to higher bills.
- Unwanted surprises: Some concerns that exist in older homes include finding asbestos, mould, rot, termites and structural issues. Having a thorough home inspection done prior to purchasing is essential.
- Labour of love: If you’re buying a historic home, you better have a toolkit ready; they’re going to require a lot of work. From water damage and electrical issues to structural problems, historic homes without proper preservation will most certainly fall into disrepair. If you decide to take on this kind of historic home, just make sure you have the finances to restore the property.
- Designated historic districts come with strict rules: Perhaps the biggest con to owning a historic home is that owners must adhere to strict rules and guidelines laid out by local laws. That means you may not be able to change or add-on to your home without the permission of the city.
- Expensive insurance: Buying a historic home will probably mean that your insurance premium can skyrocket. According to esurance.com, “many personal insurance companies don’t offer the type of coverage you’ll need to insure your home, meaning you often have to go with historic property insurance, which can be more expensive.” Additionally, an older home with structural issues (i.e. an old roof or outdated building materials) means your insurance rates can go higher.
Heritage homes and home insurance: Is it more expensive?
In general, the more expensive a home is to repair and maintain, the more expensive the insurance for the property will be. Many historic properties weren’t built to meet today’s building and safety standards. Therefore, the process of buying an older home and understanding the requirements can be very different. It’s important to understand how the risk involved with buying an older house affects insurance premiums.
How to insure your heritage home
Insurers are happy to insure newer builds that are well-constructed, well-maintained and are recent builds. Heritage homes can be more difficult because of the potential risks. Some heritage homeowners are falsely told they cannot insure their buildings. Home insurance is, in fact, available for these types of properties when they are brought up to code. Insuring a heritage home takes a little extra care and consideration to account for the unique construction and materials.
What you should understand about insuring a heritage property:
- On the surface, heritage insurance typically covers the same things that homeowners insurance will
- Check to see if your insurer can provide an appraiser who has experience evaluating heritage properties. They will be able to give you an accurate assessment of the true value of your home and potential future replacement/repair costs.
Some insurance companies may require changes to be made to a property before they will issue coverage.
- Adequate coverage is essential for these types of homes. Be sure that you have an in-depth discussion about the requirements and details with your isure broker. Without adequate coverage, you might find yourself facing the cost of meeting the heritage requirements of your home in the event of a loss.
- Make sure that you have all the reports and inspections done on the home prior to buying it. Insurance companies recognize well-maintained properties with good claims records. As well, keep accurate records and all necessary documents pertaining to home repairs, updates or renovations.
- Record and photograph any renovation or upgrades so your insurer can accurately assess the replacement cost in the event of a loss.
Your isure broker will be able to work with an insurance company that understands the specific risks associated with a heritage home.
Should you buy a heritage property?
Before buying a heritage property, be sure to weigh the pros and cons list above. If the joys of owning a heritage home with its own history, charm and character outweighs the pain of possible repairs, high insurance rates and strict rules – then you have your answer. Additionally, there aren’t that many heritage houses around. In fact, in Guelph, there are less than 100 of them. They rarely come up for sale, are mostly detached homes and generally attract a lot of attention when they do. If you do decide that an investment in a historic home is for you, be sure to speak with one of our isure brokers to learn more about heritage properties and homeowner’s insurance.
For more information about heritage designations, visit the Ministry of Citizenship & Multiculturism.