REIV Advocacy Helps Ensure More Balanced Energy Efficiency Standards

The Real Estate Institute of Victoria (REIV) is pleased that its advocacy efforts have been reflected in new minimum energy efficiency standards for rental properties by affording rental providers the necessary time and financial means to comply. The recent Victorian Government announcement regarding minimum standards, which include mandating the replacement of end-of-life hot water systems and gas heaters with efficient heat pumps and reverse-cycle air conditioners respectively, follows an effective consultation process. In its submission, REIV acknowledged the need for improved standards in addressing underlying environmental concerns and serving to benefit renters financially.

However, it stressed the critical importance of doing this in a way that did not result in a further loss of rental properties from an already depleted rental market. Any new cost impact must be fair to the state’s rental providers, a cohort who continue to struggle under a heavy regulatory and tax burden.

Central to the REIV’s submission was seeking longer timeframes, adequate financial assistance provisions and exemption clarity in relation to the regulatory implementation process.

The REIV considers it significant, then, that:

• the commencement date for almost all the new standards has been pushed back from the originally proposed date of 30 October 2025 to 1 March 2027;

• financial assistance has been made available, with every single property upgrade eligible for a discount under the Victorian Government’s Victorian Energy Upgrades program; and

• exemptions apply, including if installation costs are too high or if there is insufficient space.

Jacob Caine, REIV Interim CEO said the organisation has greatly appreciated the Victorian Government’s willingness to conduct a meaningful stakeholder engagement process and the awareness of rental provider interests it has demonstrated.

“The REIV is firmly aware of the need to prioritise energy efficiency amid broader climate change concerns and to provide related benefits to renters. So too, the importance of improved minimum efficiency standards in helping to achieve this in a rental market context,” Mr Caine said.

“We continue to advocate for a balanced rental ecosystem where all stakeholder interests must be recognised."

An overview - Residential Tenancies Amendment (Minimum Energy Efficiency Standards) Regulations 2025

The second tranche of reforms, the Residential Tenancies Amendment (Minimum Energy Efficiency Standards) Regulations 2025 were made, introducing the following new standards and uplifts to existing standards to rental properties:

A new cooling standard

A new draughtproofing standard

A new ceiling insulation standard

An uplift to the hot water system standard 

An uplift to the heating standard

An uplift to the water efficiency rating for shower heads.

The new regulations include the following key changes from the Exposure Draft regulations:

• Standard for shower heads and hot water - the compliance date has been revised to provide further time to meet the standards.

• Standard for hot water – The definition of what can be included in a calculation of “unreasonable cost” has been revised to include electrical work to upgrade a switchboard to accommodate additional load, to assist with the costs of compliance.

• Standard for heating – An additional exemption has been included allowing rental providers to replace non-energy efficient heaters ‘like for like’ if they are covered by a warranty. Further, the compliance date has been revised to provide further time to meet the standard.

• Standard for cooling – The compliance date has been revised to provide additional time to meet the standard where there is no fixed cooling installed and a new rental agreement is entered into. The compliance date has also been revised to 1 July 2030 for all rental properties to meet the standard, regardless of whether a new rental agreement has commenced.

• Standard for ceiling insulation - The compliance date has been extended to assist with the costs of compliance and support orderly industry capacity development. The standard now also includes a requirement that the insulation must be undertaken by a person that holds relevant qualifications as determined by the Minister for Energy and Resources.

• Standard for draughtproofing – In addition to extending the compliance date, reference to “unreasonable gaps or holes” has been removed.