Victoria’s rental sector is changing. New minimum energy efficiency standards for residential rental properties are being phased in from 1 March 2027, covering heating, cooling, hot water, showerheads, ceiling insulation and draughtproofing. The rules sit under the Residential Tenancies Amendment (Minimum Energy Efficiency Standards) Regulations 2025, and Consumer Affairs Victoria and Energy Victoria publish the official detail.
For many landlords and property managers the hard part is not knowing that change is coming — it is knowing what your property already has, what still needs doing, and how to fold upgrades into ordinary maintenance before the next lease. This article walks through each area in plain terms, then points to how we check properties.
Always confirm the current rules on the Consumer Affairs Victoria minimum energy efficiency standards pages and Energy Victoria’s rental energy efficiency overview. Exemptions exist (for example heritage controls, owners corporation rules, or centralised building systems). Keep proof if an exemption applies.
What the standards cover
The reforms focus on six feature-based areas — not a NatHERS certificate requirement for every rental:
- Heating — efficient fixed electric heating in the main living area when an existing fixed heater fails beyond repair (from 1 March 2027).
- Cooling — efficient fixed cooling in the main living area at a new lease from 1 March 2027; all rentals by 1 July 2030.
- Hot water — efficient electric hot water (heat pump or electric-boosted solar) when the existing system fails beyond repair (from 1 March 2027).
- Showerheads — minimum 4-star WELS at a new lease from 1 March 2027.
- Ceiling insulation — R5.0 in ceiling spaces where there is currently none, installed by a qualified installer, at a new lease from 1 March 2027.
- Draughtproofing — external doors, windows and unsealed wall vents at a new lease from 1 July 2027 (with a gas safety check first where gas appliances are present).
Existing minimum standards for a fixed heater in the main living area already apply. From 29 March 2023, new rental agreements have required an energy-efficient fixed heater under the current rules. The 2027 changes tighten what “efficient” means for replacements and add cooling, insulation, draughts, hot water and showerheads.
Step 1 — Review existing heating
From 1 March 2027, when a fixed heater permanently fails and cannot be repaired, it must be replaced with an energy-efficient fixed electric system in the main living area. Consumer Affairs Victoria defines that as either:
- a non-portable, non-ducted electric air conditioner or heat pump capable of heating, with a 2-star or above GEMS heating rating for the climate area of the premises; or
- an electric ducted heating system with a GEMS Heating Seasonal Performance Factor of 3.2 or above for that climate area.
You do not have to rip out a working heater that already meets the current minimum standard. Plan for end-of-life replacements now, and note that a reverse-cycle system can often meet both heating and cooling with one appliance.
Step 2 — Assess cooling
Cooling arrives in two phases. From 1 March 2027, at the start of a new rental agreement (or conversion to month-to-month), an energy-efficient fixed cooling system is required in the main living area — a non-ducted electric air conditioner or heat pump with a 3-star or above cooling rating for the climate area, or a ducted system with a Total Cooling Seasonal Performance Factor of 3.8 or above. From 1 July 2030, all rental properties must meet the cooling standard regardless of lease status.
If evaporative cooling is already installed, check the current Consumer Affairs Victoria guidance — existing evaporative systems can satisfy the cooling standard in the published rules.
Step 3 — Check ceiling insulation
Ceiling insulation is usually one of the highest-value upgrades for comfort and bills. From 1 March 2027, at a new lease, any ceiling space (or part of one) with no insulation must be upgraded to a minimum R-value of 5.0 by a qualified installer. Self-installation does not meet the standard. If insulation is already present, you are not required to top it up solely because of the R-value under the published rule — but topping up can still be worthwhile for comfort.
An electrical safety checklist must be completed, and any electrical issues addressed by a licensed electrician, within 30 days before insulation is installed. Victorian Energy Upgrades (VEU) discounts for ceiling insulation are being rolled out — confirm current offers on the VEU website.
Step 4 — Identify draughts and air leakage
From 1 July 2027, at a new lease, rental providers must draughtproof external doors, windows and unsealed wall vents. If the property has gas appliances, a licensed plumber must complete a gas safety check less than six months old before draughtproofing. Where the check finds un-flued or open-flued gas appliances (or a gas cooktop without a rangehood), draughtproofing must not proceed — sealing those homes can create health and safety risks.
A walkthrough finds the obvious gaps. A blower door test (ATTMA accredited tester #13381) with thermal imaging or smoke shows the leaks you cannot see — exhausts, hatches, service penetrations and poorly sealed windows — so you fix the ones that matter first.
Step 5 — Review hot water
From 1 March 2027, when a hot water system permanently fails and cannot be repaired, it must be replaced with an efficient electric system: a heat pump water heater or an electric-boosted solar water heater. Working systems that are still serviceable do not have to be replaced early under this trigger. Plan for end-of-life now, especially on gas storage units approaching replacement age.
Step 6 — Showerheads and electrification
From 1 March 2027, at a new lease, every shower needs a minimum 4-star WELS showerhead (or 3-star where plumbing constraints make 4-star ineffective — see the published exemptions). Separately, think about electrification as a package: a reverse-cycle air conditioner can cover heating and cooling; a heat-pump hot water unit removes another gas end-of-life replacement. That is usually cheaper over a portfolio than treating each appliance in isolation.
Step 7 — Get a clear property check
The standards are features-based. You do not need a NatHERS certificate to prove compliance. What you do need is a clear record of what is installed, what fails each item, and what to do next. Our rental energy efficiency readiness check walks the property against the standards with photos, a pass / action-needed list, and optional extras:
- blower door test and thermal imaging to find draughts
- existing home NatHERS rating (Existing Home Energy Assessor NEH-2025-00026) when you want a star rating to guide deeper upgrades
We are an independent assessor — we do not sell insulation, air conditioners or hot water units. The report is for you, your agent or your trades.
Managing one rental or a small portfolio? Ask for a property check before the next lease renewal so upgrades sit inside normal maintenance, not a last-minute scramble.
Ask about a property check Rental energy efficiencyWhy plan before 2027
Triggers differ: some items apply when equipment fails, others at a new lease, and cooling becomes universal by mid-2030. Starting early lets you:
- bundle work with scheduled maintenance or vacancy periods
- use VEU discounts where they apply
- avoid rushed replacements that miss the efficiency ratings
- keep better records for agents, insurers and future sales
Better-performing rentals are also easier to heat and cool, which matters for tenant comfort and for how long tenancies last.