Heritage Designation and Property Values: is there an effect?

Robert Shipley, University of Waterloo, Ontario, Canada

Abstract This paper describes research that was designed to examine the assertion that historic designation of properties, under the heritage legislation in Canada’s largest province, has a negative impact on the values of those properties. The actual selling price of subject properties was used to establish their value history trends, which were then compared to ambient market trends within the same communities. Almost 3,000 properties in twenty-four communities were investigated, in what is believed to be the largest study of its kind ever undertaken in North America. It was found that heritage designation could not be shown to have a negative impact. In fact there appears to be a distinct and generally robust market in designated heritage properties. They generally perform well in the market, with 74% doing average or better than average. The rate of sale among designated properties is as good or better than the ambient market trends and the values of heritage properties tend to be resistant to downturns in the general market.

Key words: Canada; Heritage; Historic Preservation; Listed Buildings; Property Values 

Introduction, General. By international standards the process for recognising the significance of heritage buildings in Ontario, Canada’s largest and most populous province, is not very rigorous. The basis of heritage preservation is, of course, the same as in other jurisdictions; that each generation should attempt to pass on cultural values through heritage sites that represent them (Stovel 1991). It is true that in 1975 the Provincial Government proclaimed the Ontario Heritage Act. The guiding principles behind the Act can be found in the United Nations Educational, Scientific and Cultural Organization's Venice Charter, to which Canada is a signatory (UNESCO, 1964). The Venice Charter states in part that

    [it applies] not only to great works of art but also to more modest works of the past which have acquired cultural significance with the passing of time…[that] cultural property is the product and witness of the different traditions and of the spiritual achievements of the past and thus is an essential element in the personality of the peoples of the world…that it is indispensable to preserve it as much as possible, according to its historical and artistic importance, so that the significance and message of cultural property becomes a part of the spirit of people who thereby may gain a consciousness of their own dignity…and…that it is the duty of governments to ensure the protection and the preservation of the cultural heritage … as much as to promote social and economic development (Carter, 1990).

The Ontario Heritage Act gives responsibility for heritage to local governments. Individual properties can be designated under the Ontario Heritage Act and there is also a provision for the designation of “heritage districts”. Entire neighbourhoods of historical significance can be recognized in an attempt to preserve the character of the whole area. The criteria for designation are quite general with guidelines require that structures be judged to have “historic or architectural significance” (Ontario, 1986).

To accomplish this recognition of heritage the Ontario legislation encourages municipalities to establish Local Architectural Conservation Advisory Committees (LACACs). However, these council-appointed volunteer committees can only recommend the designation of historically and architecturally significant properties to their municipal councils. Once designated any planned changes to a property (usually just the building exterior) must be reviewed by the local architectural advisory committee, who can advise the local council which makes the final decision. In the end, if the owner of a designated property decides to demolish the structure there is only a waiting period of 108 days.

The fact that the province has delegated the responsibility of heritage designation to the municipalities has had at least two outcomes. On one hand the local community can be said to be best suited to determine its own heritage and sense of what is culturally significant. On the other hand the application of the Act’s designation process has been uneven at best. Of the several hundred municipalities in the province, less than half even have architectural conservation advisory committees and only a handful of the largest cities have staff assigned to heritage conservation. It is also rare for a building to be designated without the consent of the owner. In the case of districts, once designated any individual owner within the area has the option to exempt his or her property from the provisions of designation. This all means that designated buildings are not necessarily representative of the type of buildings which might be most important to preserve. A new and more comprehensive Heritage Act was drafted several years ago in Ontario but has never been enacted. Other Canadian provinces, with the exception of Quebec, are little better off than Ontario (Carter 1990).

Need for Research. The relative weakness of heritage conservation legislation in Canada has at least a couple of causes. One is the all too common notion that little is old enough in such a young country to warrant preservation. The second aspect that discourages architectural conservation is the prevalent North American attitude toward to sanctity of private property. In general, people don’t like property regulations. In this regard, one of the most frequently raised arguments against recognizing the special significance of certain historic properties through heritage is that the value of a designated property will be decreased. It is argued that designation restricts what the owner can do with his or her property. This in turn, it is said, limits the number of buyers willing to accept such restrictions, and therefore limits the demand with the result that the potential market price for the properties is diminished.

The perception that designation has a negative impact has even reached the courts. In 1992, an legal offer to purchase a home was not honoured and the subsequent civil trial featured the supposed loss of value due to the designation of the property as a central issue. The case is still being appealed. It is often real estate professionals, including agents, brokers and appraisers, who advise people that designation will have this downward effect on the future selling price of properties. This advice is offered on the basis of what might be called a “received wisdom,” or something that is accepted without proof. When asked, the proponents of this view can point to no research or systematic study that backs up their position. What they do sometimes have is anecdotal knowledge of some particular example. In fairness it must be said that the proponents of designation are often in the same position, that is, their assertions that designation is neutral or positive, are supported by specific examples.

It is important to remember when considering this argument, that heritage is about cultural values and not about economics. It should not be suggested that heritage designation is undertaken with the expectation of enhancing the market value of a property. However, property owners are justified in hoping that they will not be penalized financially for recognizing that their buildings have a cultural value to the community as a whole. If heritage designation is not being pursued because of misinformation about economics, then that notion should be addressed and a reasoned discussion about the issue ought to be joined.


*To read the remainder of this article please refer to International Journal of Heritage Studies, Volume 6, Number 1 (March 1, 2000), p. 83-100. https://uwaterloo.ca/heritage-resources-centre/sites/ca.heritage-resources-centre/files/uploads/files/p_value_0.pdf 

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