Blinds, showers, heating and cooling: Allan government reveals proposed new rental standards

Strict new rental rules that would force landlords to make costly upgrades could cause rents to spike and strip more properties from Victoria’s already struggling rental market.

Landlords may be forced to install $5000 dollars worth of upgrades to meet new rental standards, with fears the strict rules could hike up rents and strip more properties from the rental market.

The Allan government revealed the proposed new rental rules, which include requirements for ceiling insulation, draught proofing, hot water efficiency and cooling, on Monday.

Landlords will be required to install ceiling insulation, 4-star shower heads in all showers, and blind cord anchors, and draught-proof windows and doors before signing a new lease.

Hot water and heating and cooling systems will have to be upgraded to energy efficient models when old ones reach their end-of-life, and a 3-star cooling rating will be imposed for systems in the main living area.

Lily D’Ambrosio dismissed multiple questions about whether the new standards would lead to rent hikes.

Energy Minister Lily D’Ambrosio said the full suite of upgrades would set landlords back about $5000.

But she added it would be unlikely that landlords would need to update all of the appliances at once.

“It doesn’t happen all at the one time,” she said.

“An end of life product means that a landlord in the case of rental properties are going to be up for a replacement cost anyway.”

Ms D’Ambrosio said the transition would add value to rental properties and could save renters about $567 per year off their energy bills.

However, she dismissed concerns about landlords bumping up rents due to the costs incurred.

Property Council of Australia Victorian executive director Cath Evans said if costs were passed on to owners “they must provide increased subsidies and incentives so these costs are not passed onto the tenant”.

The Property Council’s Victorian executive director Cath Evans says the government must provide increased subsidies. Picture Jake Nowakowski

“Without this support, we risk a further contraction of supply in the rental market,” she said.

Ms Evans said the state was not in a position to make rental accommodation even more unaffordable.

“Victoria is currently in the midst of a severe housing affordability crisis, being felt most keenly by renters as they grapple with wider pressures from cost of living,” she said.

“While we support improvements in living conditions and energy efficiency for renters, owners are already significantly burdened by massive increases in land tax, council rates and insurance premiums as well as increased interest rates.”

REIV President Jacob Caine says the requirements must avoid placing further strain on rental providers.

Real Estate Institute of Victoria president Jacob Caine welcomed improvements to energy efficiency but said new requirements “must avoid placing further financial strain on rental providers, many of whom are ‘mum and dad’ investors already facing tough operating conditions”.

“While we recognise these changes are needed to help realise the state’s net zero targets, the new requirements also come at a time when many rental providers may not be able to afford to make them,” he said.

“We’re asking the government to be mindful that any further financial burden on rental providers could see them sell those homes, placing more strain on an already depleted rental property ecosystem.”

The changes are currently up for consultation. The new rules will come into play from October 30 next year.