Rental efficiency standards a winner with voters

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Polling shows 80% of voters support efficiency standards for rental homes, which should encourage the Victorian government to finally deliver this critical reform as part of its review of rental laws.

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Credit: AAP
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Credit: AAP

New national polling released this week showing a massive 80 percent of voters support efficiency standards for rental homes, should encourage the Victorian government to finally deliver this critical reform as part of its review of rental laws.

With power bills continuing to be a big concern for many Victorians, helping renters cut energy waste is the single biggest thing the Andrews government could do to help Victoria’s 1.2 million renters cut their cost of living.

If this new polling – commissioned by ACOSS, the Energy Efficiency Council and the Property Council – is anything to go by, requiring rental homes to meet a basic efficiency standard would be a popular move.

This polling comes hot on the heels of new data from the ACT released last week, showing an incredible 2 in 5 rental properties have an energy efficiency rating of zero. In contrast, only 4 percent of homes for sale rate this poorly and more than half have a rating of 5 or higher.

In the absence of the ACT’s requirement to disclose efficiency ratings at the point of sale or lease, it is difficult to know the exact situation in Victoria. But it is unlikely to be much different, given ample evidence that most landlords don’t take advantage of voluntary efficiency programs even when they are free.

Inefficient homes are dangerously hot in summer and freezing in winter, or else cost a fortune to keep at a healthy temperature.

With more people renting long-term as home ownership becomes out of reach for many, these health and affordability impacts are increasingly being felt by a broad cross-section of our community, including a growing number of families.

What’s more we’re missing huge, low-cost opportunities to cut emissions.

Efficiency improvements across the building sector using current cost-effective technology could reduce emissions by 23 percent by 2030 and 50 percent by 2050. But in the absence of standards, rental homes which represent nearly a third of our building stock will remain untouched.

While many landlords do the right thing in terms of repairs and maintenance, there’s not much incentive to voluntarily invest in measures like insulation or draught-sealing when the benefits (of lower bills and improved comfort) largely accrue to the tenants.

Right now, the only standard Victorian rental homes need to meet is to have a smoke alarm. That’s it. There doesn’t need to be a heater (or to ensure it’s safe), the windows don’t need to open, and you can forget about insulation or draught-sealing.

The only way to fix this problem is to require rental homes to meet a “homeworthy” standard for health, safety and efficiency before they can be leased.

Sensible regulation which drives a progressive improvement in the efficiency performance of our rental stock would unlock 2 billion dollars of investment, supporting an estimated 3000 to 5400 jobs, while saving rental households up to $850 a year.

As low-income and disadvantaged households are more likely to rent, efficiency upgrades which lower energy bills and reduce health risks will also deliver flow-on benefits for government energy concessions and health budgets.

Concerns about potential adverse consequences (on rents or housing supply) can be managed through a staged and well-designed implementation process, as well as strengthened protections against rent increases and evictions.

The idea of regulating for efficiency performance is not new or radical. We of course already set efficiency standards for new buildings, and there’s a growing number of governments around Australia and the world now moving to set standards for rental homes.

The Queensland government introduced legislation to enable rental standards last year, while New Zealand and the United Kingdom made similar moves in 2016 and 2015 respectively.

Consistent with the approach taken by these jurisdictions, Victoria should initially set standards at a relatively low and achievable level, targeting the worst performing properties while giving landlords ample time to comply. Standards can then be progressively tightened so that all renters benefit over time.

The Victorian government’s current review of the Residential Tenancies Actprovides a once in a generation opportunity to deliver this critical reform which has been in the “too hard basket” for too long.  There will always be people who oppose all forms of regulation, and not all tenants have always behaved well either.

But we should not let the poor behaviour of a minority of tenants and landlords stand in the way of sensible reform which will make a significant difference to the majority – not only by improving quality of life for people who rent, but also by helping Victoria meet its emission reduction targets.

Anne Martinelli, Efficiency and Clean Energy Campaigner – Environment Victoria

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8 Comments
  1. Rod 5 months ago

    This could be helped along Federally by allowing accelerated depreciation on energy efficiency improvements like heat pumps for heating/cooling and hot water.

    Currently rooftop PV is depreciated over 25 Years and inverters over 10.

    • Bjorn Sturmberg 5 months ago

      Agreed, accelerated depreciation is an incentive that resonates with property investor.

      FYI the 2017 Tax Ruling TR 2017/2
      specifies that “solar photovoltaic electricity generation system
      assets” are to be depreciated over an effective life of 20 year.
      http://law.ato.gov.au/atolaw/view.htm?DocID=TXR%2FTR20172%2FNAT%2FATO%2F00007

      • Rod 5 months ago

        Thanks, my memory isn’t what it was.

  2. Tom 5 months ago

    “Strongly oppose” accrues mainly for “help the poor” topics.
    Stay classy Australia.

  3. brucelee 5 months ago

    The electricity price will reduce due to reduction in demand, so landlords actually benifit in their own electricity costs reduction as well

    • Rod 5 months ago

      I’m not sure how it works for apartments but for detached dwellings, electricity and gas bills are solely down to the tenant. No incentive for the landlord to do anything other than the hope that a more comfortable property can bring in a higher rent.

  4. George Darroch 5 months ago

    If Labor are re-elected in Victoria, this needs to happen.

  5. Ian 5 months ago

    1.2 million people rent in Victoria . The total population is 6.26 million that’s 20% . Probably a good idea to get decent energy efficiency standards for all those people.

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