Rental Properties: A Complete Guide for Landlords (2025)
- kyle36034
- Jul 7
- 3 min read
As part of Victoria’s plan to reduce emissions, improve liveability, and lower energy bills for renters, the state government has introduced a new suite of energy efficiency standards for rental properties. These changes are set to roll out progressively from 1 March 2027, giving landlords time to prepare, upgrade, and stay compliant.
This guide by CORE ELITE REAL ESTATE outlines what landlords need to know — including key dates, mandatory upgrades, exemptions, and financial support.
🔹 Key Dates for Compliance
From 1 March 2027 - Heating & Hot Water: When existing systems reach the end of life, they must be replaced with energy-efficient electric models (e.g., heat pumps). - Cooling: At the start of a new lease or when switching to periodic, landlords must install fixed energy-efficient cooling in the main living area. - Ceiling Insulation: Must be installed where none exists, achieving at least R-value 5.0. - Shower Heads: All shower heads must be upgraded to 4-star WELS-rated.
From 1 July 2027 - Draughtproofing: Landlords must seal external doors, windows, and wall vents to prevent energy loss.
From 1 July 2030 - Cooling (all leases): All rental properties — regardless of lease status — must have efficient fixed cooling in the main living area.
🔋 What Landlords Must Install
Heating & Cooling - Energy-efficient reverse-cycle split systems are preferred, as they meet both heating and cooling requirements. - Gas heating and hot water units must be replaced with electric alternatives when they fail.
Ceiling Insulation - Minimum R 5.0 thermal resistance where none exists. - Must be installed by a qualified professional.
Showerheads - All must be 4-star water efficiency rated under the WELS scheme.
Draughtproofing - Use seals or weatherstrips to close gaps in windows and doors. - Unused vents must be blocked — except where ventilation is required for gas appliance safety.
Certified ceiling insulation being installed in an older rental property to achieve R5.0 thermal resistance.
⚠️ Exemptions
Some properties may qualify for exemption if: - The landlord has no legal access to install (e.g., apartments with common ceilings). - Physical constraints or heritage overlays prevent installations. - Upgrades are prohibitively costly due to electrical or structural requirements. - A central building system already provides heating/cooling/hot water.
Landlords must retain documentation proving why an exemption applies.
💵 Penalties for Non-Compliance
Fines of up to ~$11,000 (individuals) or higher for companies.
enants may terminate the lease within 14 days if standards aren’t met.
VCAT can order urgent repairs or compensation.
🚚 Government Rebates & Support
Victorian Energy Upgrades (VEU): Discounts on efficient appliances (cooling, hot water, insulation, draught sealing).
Solar for Rentals Program: Rebates up to $1,400 plus interest-free loans.
Certificates & Depreciation: Installation costs may be tax-deductible over time.
🔍 CORE ELITE Tips for Landlords
Audit your property before 2027 to assess what needs upgrading.
Use accredited tradespeople for installation.
Communicate with tenants — compliance benefits them too.
Keep documentation of every upgrade or exemption.
We recommend acting early to avoid last-minute pressure. Energy-efficient homes are not only compliant but also more attractive to tenants and buyers.
References:
Consumer Affairs Victoria: www.consumer.vic.gov.au
Victorian Energy Upgrades: www.energy.vic.gov.au
Solar for Rentals Program: www.solar.vic.gov.au/solar-rentals
Disclaimer
This article is for general information purposes only and is not legal or financial advice. Landlords should consult relevant professionals (solicitor, property manager, tax advisor) before making decisions related to property compliance. Regulations are subject to change; refer to official government websites for the most accurate and current information.
