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New minimum energy efficiency standards for residential rental properties come into effect in phases from 1 March 2027.
About the minimum energy efficiency standards
The new standards cover heating, cooling, hot water, shower heads, ceiling insulation and draughtproofing. They follow consultation on draft regulations in 2024 and are part of wider electrification regulations for Victoria.
The new standards aim to drive down power bills for renters, keeping their homes more comfortable year-round, and reduce emissions. `
The changes will begin in phases and have different triggers, giving rental providers time to plan ahead. Discounts and rebates are also available to help with the cost of upgrades.
Timing of new energy efficiency standards
|
Date effective
|
New standard
|
Description of change
|
From 1 March 2027
|
Heating |
When existing heating permanently fails, rental providers must replace them with energy efficient electric heating. For example, a reverse cycle air-conditioner. |
Hot water systems
|
When existing hot water systems permanently fail, rental providers must replace them with efficient electric water heater (heat pump).
|
|
Ceiling insulation
|
At the start of a new rental agreement – or conversion to a month-by-month agreement – rental providers must install ceiling insulation in spaces where none exists, using an accredited installer.
|
| Shower heads |
At the start of a new rental agreement – or conversion to a month-by-month agreement – rental providers must install 4-star showerhead/s.
|
| Cooling |
At the start of a new rental agreement, or conversion to a month-by-month agreement, rental providers must install efficient electrical cooling (eg: reverse cycle air-conditioner) in the main living area.
The new cooling standard will require that a 3-star fixed energy efficient cooling appliance or 2-star equivalent central cooler be installed in the main living area of a rental property.
If there is an existing fixed non-energy efficient cooling appliance, it must be upgraded to an energy efficient system at the end of life of the existing appliance.
From 1 July 2030, all rental properties must have energy-efficient cooling in the main living area. This will apply regardless of the date a rental agreement was entered into or commenced unless a specific exemption applies. |
| From 1 July 2027 |
Draughtproofing |
At the start of a new rental agreement, or conversion to a month-by-month agreement, rental providers must draughtproof all external doors, windows and unsealed wall vents.
Note: a gas safety check must be conducted prior to any draught-proofing taking place. |
Discounts and rebates
Through the Victorian Energy Upgrades (VEU) program, rental providers can access discounts and rebates on a range of eligible upgrades, including:
- replacing gas space heaters with reverse-cycle air conditioners
- replacing gas hot water systems with heat pump hot water systems
- draughtproofing
- showerheads.
Ceiling insulation discounts are expected to be available by 1 January 2027.
Exemptions
Exemptions apply in situations where compliance with the standards is not possible or would be unreasonably costly. Common examples include:
- Rental apartments where heating, cooling or hot water is supplied through a centralised building system
- Properties where installation is not permitted under heritage laws or owners corporation rules
- Situations where there is insufficient ceiling space to install insulation.
A full list of exemptions for each standard is set out in Schedule 4 of the Residential Tenancies Amendment (Minimum Energy Efficiency Standards) Regulations 2025.
Download the regulations: