Key takeaways
The Victorian state government has begun consultation on expanding rental standards, which could significantly improve the quality of life for renters and lower energy bills.
Under the proposed changes, rental providers will need to ensure their property meets a minimum requirement for ceiling insulation and draught sealing, and replace hot water and heating systems with energy-efficient electric appliances.
The Victorian Government is proposing to introduce minimum rental standards from 30 October 2025, which would require landlords to ensure their properties meet requirements for tenant safety and comfort. This would mean increased costs for landlords and a potential knock-on effect for tenants.
A recent report found that changes to minimum standards could prompt rental providers to withdraw properties from the market, further limiting supply and reducing choice for renters. This would further reduce supply and make it harder for tenants to find affordable housing.
To prevent a mass exodus of landlords and worsening of Victoria's already restricted rental market, the government should add some incentive to its proposal and focus on creating a more supportive environment for property investors.
Property investors in Victoria will soon need to meet minimum heating and cooling standards under new proposed minimum standards.
The state government has begun the consultation process to expand rental standards, which includes requirements for ceiling insulation, draught proofing, hot water efficiency and cooling necessities.
The proposed changes to Victoria’s minimum rental standards were open for consultation until July 1, with a decision set to be made by October 2024.
And while the proposal is expected to significantly improve the quality of life for renters, including helping lower energy bills (by as much as $567 per year, according to Energy Minister Lily D'Ambrosio) there are concerns that it will only exacerbate an already-tight rental market.
The proposed changes explained
Under the proposed changes, rental providers (previously called landlords) will need to ensure their property meets a minimum requirement for ceiling insulation where there is no ceiling insulation already installed and has draught sealing, including weather seals on all external doors.
Rental providers would also be required to replace hot water and heating systems with energy-efficient electric appliances when their current appliance reaches the end of life.
The standards will also introduce a 3-star cooling rating for systems in the main living area, 4-star shower heads in all showers and blind cord anchors.
New standards will be phased in, with compliance commencing from 30 October 2025.
Victoria’s proposed minimum rental standards for rental properties and share houses
| Standard | Trigger for compliance |
| Blind cord safety anchor | By 30 October 2025. |
| Ceiling insulation | From 30 October 2025, where:
● There is a new rental agreement or conversion from fixed term to periodic rental agreement; and ● Where there is no ceiling insulation present. |
| Cooling | From 30 October 2025:
● If there is no existing cooling, where there is a new rental agreement or conversion from fixed term to periodic rental agreement; or ● Where there is existing cooling, at the end of life of the existing cooling system. From 30 October 2027, all rental properties are to have a fixed cooling system. |
| Draughtproofing | From 30 October 2025, where there is a new rental agreement or conversion from fixed term to periodic rental agreement. |
| Heating (residential properties) | From 30 October 2025, at the end of life of the existing fixed heating system. |
| Heating (rooming houses) | ● By 30 October 2025, where there is no existing fixed heating system; or
● From 30 October 2025, where there is existing fixed heating in the bedroom, at the end of life of the existing fixed heating system. |
| Hot water | From 30 October 2025, at the end of life of the existing hot water system. |
| Shower head | From 30 October 2025, where there is a new rental agreement or conversion from fixed term to periodic rental agreement. |
Source: Victorian Government
What this means for property investors
The proposed minimum standards mean landlords would be accountable for ensuring their properties meet requirements for tenant safety and comfort, which may involve some investment.
If the investment property doesn’t meet the requirements, the owner may face hefty fines and charges or even be taken to court.
The idea is that, ultimately, the standards result in more desirable rental accommodations.
But, at a time when there are so many headwinds facing Australia’s property investors, and a mass exodus in 2020-21, there is concern that the proposed minimum rental standards represent yet another layer of complexity and cost for landlords statewide.
These standards, imposing increased minimum requirements for insulation and heating upgrades, increase the challenge faced by property owners in maintaining profitability while meeting regulatory demands.
Energy Minister Lily D'Ambrosio estimated that landlords could face costs of $5,000 if they were mandated to implement all upgrades.
But it could be much more than this, depending on what work needs to be completed.
And it could have a knock-on effect on tenants too
Financial pressures not only strain landlords' resources but also threaten rental affordability for tenants, potentially necessitating rent increases.
The reality is, that it’s likely that landlords who are forced to fork out thousands to meet the proposed standards, will pass the expense onto their tenants.
This would effectively neutralise the potential $791 energy saving pitched by the state government.
If the price of rent goes up, that will then have a knock-on effect on all nearby properties.
A recent report by Deloitte for the Department of Energy, Environment and Climate Action last month found changes to minimum standards could prompt rental providers to withdraw properties from the market, "further limiting supply".
"The introduction of minimum standards is more likely to affect older rental properties disproportionately," the report said.
"Should these properties exit from the rental market, this may reduce choice and supply for renters, particularly at the more affordable end of the market."
Will Victoria face a mass exodus of investors?
The concern is that these new compliance measures could be the "straw that broke the camel's back" for some property investors.
And the issue isn’t just about existing landlords exiting the market; potential new landlords are also wary of investing in Victoria.
Many investors are now avoiding or threatening to leave Victoria altogether, seeking opportunities in other states with more favourable conditions.
And the majority of them cite increased government interference, exacerbated by new policies, as the reason for looking elsewhere.
This reluctance to invest will only further shrink the available rental stock, making it harder for tenants to find affordable housing.
In order to prevent a mass exodus and worsening of Victoria’s already restricted rental market, the government would need to add some incentive to its proposal to get landlords on board.
But to address this crisis fully, it’s crucial to avoid the blame game and focus on constructive solutions.
Demonising landlords can lead to a worsening situation for renters, who are already feeling the pinch of reduced rental availability and higher prices.
We need to resist the temptation to point fingers at landlords.
Blaming them as the bad guys will only exacerbate the problem, making things even worse for long-suffering renters.
Instead, we should work on creating a more supportive environment for property investors, which in turn will help stabilise and grow the rental market.
The bottom line…
It’s true that these new minimum heating and cooling standards under the new proposed minimum standards will improve the quality of Victoria’s rental homes and the quality of life of their tenants.
But, in reality, they place an extra burden on rental providers (landlords) and their property managers.
At Metropole Property Management we have spent a lot of time, effort and training to ensure we are up-to-date with this new legislation to protect both our landlords and our tenants.
If you have any queries please don't hesitate to contact us by clicking here and clarify your obligations and options.
