Lead paint rules costing remodeling jobs, raising prices, remodelers say

Remodelers are losing projects to uncertified contractors under the higher costs of LRRP rules, survey says

February 01, 2012

Nearly two years into the new world of lead paint rules, remodelers say the regulations are driving up the cost of doing business and pushing clients to hire uncertified contractors.

That’s according to the latest Professional Remodeler research, in which we surveyed hundreds of remodelers about the impact of the EPA’s Renovation, Repair and Painting Rule.

“It has cost me business, because no client wants to pay the additional cost involved for me to be compliant with the EPA,” said a Virginia full-service remodeler. “I would say that the RRP rules haven’t helped me in the least bit. They have cost me jobs; cost for compliance, training and certification; as well as materials and equipment to be compliant.”

That’s proven true for many remodelers, with 65 percent of respondents to our survey reporting they have lost business because of the regulations.

Clients won’t foot the bill

The biggest problem with the RRP regulations, remodelers say, is that most homeowners are not willing to pay more for contractors to follow lead-safe work practices as prescribed by the EPA.

“We lose work because of it,” said a California design/build remodeler. “Most homeowners think it is ridiculous and won’t work with a contractor who feels obligated to comply.”

So how big an increase in job price are we talking about? The EPA puts the cost at “$35 to $376, depending on the size and nature of the job.”

The remodelers we surveyed put the figure much higher — 37 percent said it adds more than $1,000 to the cost of the average project and 81 percent said it adds more than $400, above the high-end of EPA’s estimates.

Most remodelers are finding that homeowners know nothing about the RRP until the contractor brings it up. Sixty-five percent of remodelers estimated that less than 10 percent of their potential clients are aware of the rule. Only 5 percent think more than half of homeowners know about it.

So it isn’t surprising that many homeowners are opting to use an uncertified contractor that isn’t following the rules. Of those remodelers who have lost out on projects because of the lead paint rules, 76 percent said they have had clients hire an uncertified contractor. Forty-four percent of remodelers said potential clients have decided to do the work themselves and 44 percent said they’ve seen homeowners simply cancel planned projects.

Unless a homeowner sees the benefit of the lead-safe work practices, there is no incentive for them to hire a certified contractor. The rule clearly states that there are no restrictions put on homeowner activity. Even if a contractor is caught breaking the rules, they will be fined, but the homeowner won’t face any repercussions.

That homeowner apathy is a big reason NAHB and other trade groups have been trying to get the opt-out provision, originally included in the EPA rule, restored. (Simply put, the opt out allowed remodelers working in a home built before 1978 to forego the lead-safe work practices if no children under 6 or pregnant women resided there and the homeowner chose to “opt out” of having the remodeler follow them.)

More than three-quarters of remodelers said that restoring the opt-out would help their business, while only 7 percent said it would not. NAHB made its arguments in front of the U.S. Circuit Court of Appeals for the District of Columbia in November.

Uncertified competition

The respondents to our survey are familiar with the regulations and are taking steps to follow them, but they appear to be the exception. Almost 70 percent of remodelers in our survey described themselves as “very familiar” with the rules and another 25 percent were “somewhat familiar.”

Remodelers in the Northeast and Midwest, with their older housing stock, were the most familiar with the rules. Eighty percent of remodelers in the Northeast described themselves as very familiar, compared to 70 percent in the Midwest and 61 percent in both the South and West.

Three-quarters said they have gotten the required training for working in pre-1978 homes and certified their firm with the EPA to provide those services. Again, remodelers in the Northeast (83 percent) were the most likely to be certified, compared to 75 percent in the West, 71 percent in the Midwest and 66 percent in the South.

Larger firms were also more likely to report they were in compliance. While 91 percent of firms having more than $2 million in revenue in 2011 did so, only 60 percent of those companies with revenue less than $500,000 did.

Presumably, like similar surveys by other groups have shown, readers of trade magazines and members of trade associations or industry peer groups are more likely to be the types of companies that are going to be informed about regulations and follow them.

Unfortunately, the remodelers in our survey said their competition is not nearly as dedicated to following the law. About two-thirds of the respondents in our survey say that less than half of the remodelers in their local market are even aware of the rules. Remodelers in the Northeast and Midwest again reported more familiarity.

Even fewer of those remodelers are following the regulations, giving homeowners plenty of options if they don’t want to pay the extra cost of remodeling.

Fully 46 percent of respondents said less than 10 percent of remodelers in their local market are following the regulations and only 8 percent think more than half of their local competitors are in compliance. Those numbers were relatively steady across regions, with remodelers in the Midwest and, to a lesser extent, the Northeast reporting slightly higher compliance levels.

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