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New minimum energy efficiency standards

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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

New minimum energy efficiency standards for residential rental properties come into effect in phases from 1 March 2027.  

The new standards cover 6 areas:

  • heating
  • cooling
  • hot water
  • shower heads
  • ceiling insulation, and
  • draughtproofing.

The standards have different triggers and start dates, giving rental providers time to plan ahead. Discounts and rebates are available to help with the cost of upgrades. 

These changes are part of the Victorian Government's wider electrification and energy efficiency reforms and follow public consultation. They aim to reduce energy costs for renters and improve the comfort of rental homes across Victoria. Learn more. 

The information on this page will help you understand what each standard requires and when it applies to your property. 

Discounts and rebates

Rental providers can reduce the cost of upgrades through the Victorian Energy Upgrades (VEU) program. Every upgrade under the new standards is eligible for a VEU discount. 

Most discounts are available now, with ceiling insulation discounts available from late 2026. 

Visit the VEU website for current offers and eligibility information.  

Rebates are also available through Solar Victoria for eligible heat pump and solar hot water products.  

Exemptions

Exemptions for each standard may apply where compliance is not possible. Rental providers should keep proof that an exemption applies if their property does not otherwise meet the standard. 

The most common exemptions are listed under each standard below. 

The full list of exemptions is set out in Schedule 4 of the Residential Tenancies Amendment (Minimum Energy Efficiency Standards) Regulations 2025. 

Read about the standards 

Each standard has different requirements and triggers. Find the ones relevant to your property below. 

Note: Some of the standards reference technical specifications. For example, energy efficiency star ratings, the climate area of the rental property, R-values for insulation and WELS ratings for showerheads. You can find guidance on the specifications under each standard below, including where to find products that meet them. 

From 1 March 2027, when an existing fixed heating system fails and can't be repaired ,it must be replaced with an energy-efficient fixed electric heating system with an outlet in the main living area.

You do not need to replace a functioning heater, as long as it meets the existing minimum standard. The new standard is triggered only when your existing system breaks beyond repair.

If you do not have heating in the property or your current heater does not meet the existing minimum standard, you must immediately install a heating system that does.

What to install

Minimum requirements

When it applies
An energy efficient fixed heater in the main living area.

Energy efficient heating means either:

  • an electric, non-portable, non-ducted air conditioner or heat pump capable of heating with a 2 star or above GEMS heating rating (for the climate area of the rented premises).

OR

  • an electric ducted heating system with a GEMS Heating Seasonal Performance Factor of 3.2 or above (for the climate area of the rented premises).
 When your existing fixed heating system fails and cannot be repaired

A note on cooling

A reverse-cycle air conditioner also provides cooling. If you're replacing your heating with a reverse-cycle system, the same appliance may also satisfy the cooling standard – potentially saving you the cost of a separate upgrade. Read the cooling standard below.

Exemptions

You may be exempt from meeting this efficiency standard if, for example:

  • heating is supplied through a centralised building system or there is insufficient space for the external compressor unit (common in apartments)
  • installation is not permitted under heritage laws or owners corporation rules.

If an exemption applies, you still need to have a fixed heater installed in the main living area under the existing minimum standards for rental properties. Portable heaters do not meet the standard.

What this means for you

Read more about the heating upgrades you may need to make based on your current appliances.

Find out how to get a VEU discount on heating upgrades.

The cooling standard has 2 phases.

From 1 March 2027, rental providers must install an energy-efficient, fixed cooling system with an outlet in the main living area. This applies at the start of a new rental agreement.

All rental properties must have cooling installed from 1 July 2030, regardless of lease status.

What to install

Minimum requirements

When it applies
A fixed energy-efficient cooling system in the main living area

Energy efficient fixed cooling means either:

  • a non-portable, non-ducted electric air conditioner or heat pump capable of cooling, with a 3 star or above cooling rating (for the climate area of the rented premises).

OR

  • a ducted electric air conditioner or heat pump capable of cooling, with a Total Cooling Seasonal Performance Factor of 3.8 or above (for the climate area of the rented premises).

At the start of a new rental agreement, or conversion to a month-to-month agreement.

Or if you already have a fixed cooling system, when it fails and cannot be repaired.

From 1 July 2030 all rental properties must meet the cooling standard.

 

A note on heating

A reverse-cycle air conditioner also provides heating. If you install one to meet the cooling standard, the same appliance may also satisfy the heating standard – potentially saving you the cost of a separate upgrade. Read the heating standard above.

Exemptions

You may be exempt from meeting this standard if, for example:

  • cooling is supplied through a centralised building system (common in apartments)
  • installation is not permitted under heritage laws or owners corporation rules.

What this means for you

Read more about the cooling upgrades you may need to make based on your current appliances.

Find out how to get a VEU discount on cooling upgrades.

From 1 March 2027, when an existing hot water system permanently fails and can't be repaired, rental providers must replace it with an energy-efficient electric hot water system.

You do not need to replace a hot water system that is in good working order. This standard applies only when your existing system breaks down beyond repair.

What to install

Minimum requirements

When it applies
An energy efficient electric hot water system

The system must be either:

  • an efficient heat pump water heater

 

OR

 

  • an electric-boosted solar water heater
When your existing hot water system fails and cannot be repaired

Exemptions

All rental properties must provide hot water to the kitchen, laundry and bathroom facilities.

However, you may be exempt from meeting the hot water efficiency requirement if, for example:

  • hot water is supplied through a centralised building system (common in apartments)
  • installation is not permitted under heritage laws or owners corporation rules
  • there is insufficient space to install a heat pump system or rooftop solar panels.

What this means for you

Read more about the hot water upgrades you may need to make based on your current appliances.

Find out how to get a VEU discount on hot water upgrades.

From 1 March 2027, rental providers must install water-efficient shower heads in all showers. This applies at the start of a new rental agreement, or when an existing agreement converts to a month-to-month agreement.

What to install

Minimum requirements

When it applies
Water-efficient showerhead/s in all showers

Minimum 4-star WELS (Water Efficiency Labelling and Standards) rating

 At the start of a new rental agreement, or conversion to a month-to-month agreement

What is a WELS rating?

Water Efficiency Labelling and Standards (WELS) is the national water efficiency rating system for plumbing products. WELS star ratings are displayed on product packaging.

Exemptions

You may be exempt from this standard if the age, nature or structure of the plumbing in the rented premises means a 4-star rated shower head can't be installed or when installed will not operate effectively.

If you can't install a 4-star shower head, you must install a 3-star shower head instead.

Find out how to get a VEU discount shower head upgrades.

From 1 March 2027, ceiling insulation must be installed by a qualified installer in all ceiling spaces or parts of ceiling spaces where no insulation is currently installed. This applies at the start of a new rental agreement, or when an existing agreement converts to a month-to-month agreement.

You do not need to install insulation if your property already has ceiling insulation, regardless of its rating or type of material.

What to install

Minimum requirements

When it applies
Ceiling insulation in all ceiling spaces where none currently exists

Minimum R-value of 5.0, installed by a qualified installer

 At the start of a new rental agreement, or conversion to a month-to-month agreement

Qualified installer requirement

Only a qualified installer can install ceiling insulation. You can't self-install to meet this standard. We will share more information about where to find a qualified installer before the standard commences in March 2027.

The standard also requires an electrical safety checklist to be completed and any electrical issues to be addressed by a licensed electrician within 30 days before installation of insulation.

Exemptions

You may be exempt from this standard if, for example:

  • there is insufficient ceiling space to install insulation
  • installation is not permitted under heritage laws or owners corporation rules
  • the ceiling space is not safely accessible.

What this means for you

Read more about the ceiling insulation upgrades you may need to make based on what you have now.

A VEU discount for ceiling insulation will be available from 1 October 2026.

From 1 July 2027, rental providers must draughtproof all external doors, windows and unsealed wall vents. This applies at the start of a new rental agreement, or when an existing agreement converts to a month-to-month agreement.

Important: If the property has gas appliances, a licensed plumber must carry out a gas safety check before any draughtproofing work begins. The check must be less than six months old at the time the draughtproofing work is completed.

This is a legal requirement. If the check identifies un-flued or open-flued gas appliances, draughtproofing must not go ahead – these appliances create health and safety risks when a home is sealed.

What to install

Minimum requirements

When it applies
Draughtproofing on all external doors, windows and unsealed wall vents

Draught-sealing or weather-stripping products must be fitted to all gaps around external doors and windows, and all unsealed wall vents.

 At the start of a new rental agreement, or conversion to a month-to-month agreement

Exemptions

You may be exempt from this standard if, for example:

  • installation is not permitted under heritage laws or owners corporation rules
  • the gas safety check has indicated that the property has gas un-flued or open-flued appliances or a gas cooktop without a rangehood. Draughtproofing should not be undertaken where these appliances are present as it may pose health and safety risks.

What this means for you

Read more about the draughtproofing you may need to do based on what you have currently.

Find out how to get a VEU discount on draughtproofing upgrades.

Compliance 

We will continue to provide more information about compliance requirements over the coming months.  

In the meantime, we encourage you to review your rental property and understand what changes you may need to make to meet the new standards.  

If you do any installation work, you should keep proof of installation and appliance information.