Minimum energy performance standards for rentals: The state of play around Australia
In 2019, Australian governments committed to develop a National Framework for Minimum Rental Requirements as a step towards improving the energy performance of existing rental properties. This Framework was to be finished before the end of 2022, with jurisdictions to begin implementation before the end of 2023.
Over the last five years, we’ve seen some progress towards these objectives, although some jurisdictions still remain far behind. In this post we want to take a look at the current state of play. We’ll start by outlining the recommended approach of the Healthy Homes for Renters coalition, and then look at the efforts made so far by each jurisdiction and the Commonwealth.
What we want to see: minimum energy performance standards
In 2022, Healthy Homes for Renters, a coalition of organisations across Australia working towards minimum energy performance standards for rental homes, released the Community Sector Blueprint. This document is civil society’s own framework for rental standards, where we offer a model and aim to deal with the detail and complexity of introducing workable rental standards.
The Blueprint identifies that governments might begin action on rental standards through “features-based” standards. This is a standard where the requirement applies to specific features, such as ceiling insulation on an efficient heater, that would be present in the rental home. Another option is a “modelled performance” standard, whereby the property must achieve a certain outcome, but there may be various paths to achieve this outcome.
The state of the states
In recent years, both Victoria and the Australian Capital Territory have made promising progress on introducing features-based energy performance requirements for rental homes. Tasmania, Queensland and South Australia have made small moves. New South Wales, the Northern Territory, and Western Australia are all laggards.
Victoria
Victoria currently has a requirement for a 2 star energy-efficient heater in the main living area of a rental home. This is an important feature: although it doesn’t reduce the need for heating, it does make it easier and cheaper for renters to heat their homes to a decent standard. Compared to heating with an inefficient electric heater, an efficient system can save about $1000 a year.
However, Victoria’s standard includes no requirements around ceiling insulation or cooling. But here, signs are good. In late 2023, the Victorian Government committed to expanding existing standards to cover ceiling insulation, draught sealing, cooling, and hot water systems. If Victoria makes good on its commitment, then people renting in Victoria will soon have homes that are cheaper and easier to heat and cool all year round. This is great protection against hotter summers and rising energy costs.
The ACT
The ACT acted later than Victoria, with a standard taking effect from 1 April 2024. But the ACT deserves credit for being the first jurisdiction to mandate ceiling insulation in rental properties: a critical measure that helps keep heat in during winter and helps stop renters cooking from above in summer.
Specifically, the ACT model requires that a property should have at least ceiling insulation rated at least R2, and if the property has ceiling insulation below R2 then it must be brought up to R5, which is roughly the standard of newly-built homes in the ACT.
The ACT’s requirement for ceiling insulation means it doesn’t take as much energy to heat a home in winter or cool it in summer. But renters should still have access to appliances that can efficiently and effectively heat and cool a home. The ACT should expand its existing standard to also require efficient electric heating/cooling. Requiring rooftop solar would also help improve affordability, making it easier for renters to afford to run conditioning appliances.
Tasmania
Tasmania doesn’t really have anything in the way of energy performance standards, but it does at least already have a requirement for some sort of heating appliance in the main living area. But there are some problems with this. Firstly, some properties are so draughty and uninsulated that, even with heating, they are still too cold. Many Tasmanian rentals also meet the standard with wood-burning fireplaces, which are expensive and cause pollution. Finally, many heating appliances are too costly to run, so renters don’t use them. Tasmania should mandate features like ceiling insulation that reduce the amount of heating required and appliances like reverse-cycle heaters that are much cheaper and more effective than a plug-in heater.
So Tasmania still has a way to go, but it’s promising to at least see some recognition that renters should have a liveable home, and the existing standard gives the government something to build upon.
Queensland and South Australia
Don’t get your hopes up: sadly, neither Queensland nor South Australia has any requirements in place to ensure that a rental home can be affordably kept at a healthy temperature.
However, they have taken one of the first steps. Both jurisdictions have amended their tenancy legislation so that a minister has the power to specify rental standards in regulation.
Queensland made this change some years ago now, so the bad news is that they’ve had plenty of time to introduce regulations…and they haven’t. Talk about a missed opportunity! In South Australia, the change happened only recently, so that is more encouraging and we hope the government there takes this chance promptly to begin the process of introducing regulations.
The Northern Territory, New South Wales, and Western Australia
If the Queensland Government’s lack of concern for the wellbeing of renters gets you down, well, the news gets worse. In the NT, NSW, and WA, we haven’t even seen baby steps towards introducing minimum energy performance standards.
In WA, the government has just completed a round of rental reform, and we understand that the second tranche will consider minimum energy efficiency standards. Let’s hope! In NSW, the relatively-new government has also been busy with other rental reform, so we hope they can lay this foundation and then build on it by introducing energy efficiency standards. NSW already has quite detailed minimum standards for rental properties, which is great, what is needed is expanding these standards to also consider energy performance.
What about the Commonwealth?
The Commonwealth doesn’t have the constitutional authority to directly regulate minimum energy performance standards. But they aren’t off the hook altogether, and there is a role they can play in helping to support action in this space.
One part of this is helping to directly fund energy performance retrofits. The Commonwealth has already done well here, stumping up $300 million to begin the process of lifting the energy performance of social housing. This is a strong start, and we hope to see the funding and ambition increased to ensure that all social housing is brought up to a decent standard.
In addition to direct funding, the Commonwealth can use other levers to support or encourage the implementation of rental energy performance standards. This could include chipping in to support complementary measures implemented by jurisdictions. For example, landlords in the ACT can access zero-interest finance to install ceiling insulation in a rental home through the ACT’s Sustainable Households Scheme. The Commonwealth has tipped in a small amount of money to help fund that scheme. Another option would be to tweak tax laws to better encourage landlords to make energy efficiency retrofits, for example encouraging landlords to replace a broken appliance with a more-efficient option.
Conclusion
It’s disappointing that jurisdictions haven’t acted with more alacrity to ensure that people who rent can have healthy homes. Too often as renters we grow accustomed to low expectations — a level of neglect and passivity from governments that would not be accepted by other constituencies.
Fortunately, there are signs that this is changing: that jurisdictions are becoming more attentive and responsive to renters’ needs. Over the last few years we’ve seen action in the ACT and in Victoria, helping to break the ice and demonstrate what’s possible in this space. We’ve also seen accelerating action on other rental issues, like ending no grounds evictions in South Australia and moving to ban rent bidding in Queensland. These are positive signs, and we hope this overview can help lay out the work that remains to be done to ensure that renters can have, at the very least, a home that keeps them healthy.