The business of renting out HVAC equipment is nothing new. For years, there have been companies in Southern Ontario (especially in the GTA) who have profited from signing water heater rental contracts with homeowners. Lately, some companies have started offering furnace rentals as well.
On the surface, renting a furnace doesn’t seem like such a bad deal. After all, furnaces are expensive pieces of equipment, and it’s becoming increasingly common for families to uproot and move from place to place. It seems sensible to rent a furnace rather than investing a big chunk of change in a home you might not remain in for long.
But there are drawbacks, too. Many of the same issues that existed with water heater rentals (to the point that the government actually legislated against them) are also true of furnace rentals. So is renting a furnace ever a good idea?
The Truth About Furnace Rentals
Roger Grochmal of AtlasCare has had his eye on the issue of HVAC equipment rentals for some time now. AtlasCare is highest-rated GTA heating repair company, and Roger has been in the industry for many years.
“While the Ontario government passed a law some time ago to protect consumers from door-to-door sales agents trying to switch their hot water heaters, the door was left open on other equipment ,” he writes regarding furnace rentals in the GTA.
Roger goes on to name two very big problems that can arise when it comes to selling a home after signing a furnace rental contract.
To start, he says many real estate agents are advising their clients not to agree to take on this kind of contract when they rent a home.
“They have done the math and figured out that it is not a good deal to assume someone else’s rental contract.”
That means there is a good chance you’ll have to buy out the furnace rental contract you signed in order to sell your home, which can be as much as 50% higher than the cost of purchasing the furnace outright.
Another challenge arises in the form of liens.
“These rental contracts are rock solid and there is no getting out of them,” Roger warns. “In fact, these companies can register a lien against your property to protect their interest. It’s a high price to pay for short term cost certainty.”
He advises clients to be vigilant when it comes to furnace rental contracts, especially first-time home buyers. Home builders encourage these contracts because it reduces their cost of building a home, but the agreement is particularly disadvantageous to homeowners who plan to move before the term is up.
Limiting Your Choice in Furnace Repairs
There is yet another reason to be cautious about furnace rentals: the contract often states that only certain companies can service the unit. That means you might not be able to call your preferred GTA heating repair company in the event of a breakdown.
In fact, it’s often none other than the company who sold you the contract in the first place.
While this may not seem like an issue, it can leave you in a difficult position if the company is unable to service your furnace within a reasonable time. No one wants to be left in the cold in the middle of the winter in Toronto.
It’s not to say that renting a furnace is always a bad idea, and if you truly cannot afford to buy a new furnace outright (and you are unable to obtain financing) it may be your only option. Just know the potential pitfalls these kinds of contracts impose.