Consultancy Deloitte, in a regulatory impact statement for the departments, said the effect on the rental market was likely to be minimal.
“While some rent increases might occur, these will be offset to some extent by energy savings for renters,” it said.
Vacancy rates in Melbourne have been at a record low of 0.8 per cent, according to Domain data from February. Median asking rents for houses had increased 14 per cent year on year to $570 a week in the March quarter, the latest Domain Rent Report said.
Energy Minister Lily D’Ambrosio said new heating and cooling systems could save renters $215 a year, while the lower-cost option to upgrade a hot water system would save tenants about $113 a year. The government said the total savings could be $567.
D’Ambrosio said the cost to a landlord of all upgrades would be about $5000, but this would be spread over several years. Some homes would not need all the upgrades if they already reached the standard.
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“For those landlords who may wonder, ‘Well, what’s in it for me?’ The important thing … for them to understand and remember is that it actually does improve the resale value of a property, and there’s a win here for everyone,” D’Ambrosio said.
Jennifer Beveridge, chief executive of Tenants Victoria, said renting was an essential service, and the living standards of one-third of Victorians would improve as a result of the proposal.
“When the original minimum standards for rentals were introduced in 2021, the sky certainly did not fall in for landlords,” Beveridge said.
Commissioner for Residential Tenancies Heather Holst said draught-proofing and insulation was particularly welcomed because heating and cooling was inefficient in many rental homes.
“Many renters have told me over the years about it all just disappearing out through the roof or through the cracks,” Holst said.
Real Estate Institute of Victoria president Jacob Caine said landlords could end up selling their homes, worsening vacancy rates further, if they were put under more financial strain.
“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,” Caine said.
Consultations close in July before new standards are determined in October. Caine asked the government for more time to analyse and understand the impacts.
Environment Victoria’s Dr Kat Lucas-Healey said ceiling insulation was the bare minimum.
“The government needs to make sure these new standards are strongly and proactively enforced,” Lucas-Healey said. “It’s simply not fair to put that responsibility onto renters.”
Opposition housing affordability spokesman Evan Mulholland said costs would be passed on, and that land tax increases were already making landlords question whether they could continue.
“The people that are going to pay for that are vulnerable renters who need to get a roof over their head,” Mulholland said. “Investors are fleeing the state.”
Sweltering Cities executive director Emma Bacon said too many Victorian renters had sweated through hot days and nights last summer.
“Unfortunately, we know that lots of people are second-guessing whether they can afford to even turn on air-conditioning in summer,” she said.
Every rooming house bedroom will also need a heater under the proposal.
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