The state government will impose new Minimum Energy Efficient Standards on rental properties from 1 March 2027.

Under the changes announced this week -

• Hot water systems must be replaced with efficient heat pumps at end of life


• Gas heaters at end of life must be replaced with reverse-cycle air conditioners


• A minimum 4-star Water Efficiency Labelling and Standards (WELS) rated shower head must be installed at the start of a new lease


• Minimum R5.0 rating ceiling insulation must be installed at the start of a new lease where there is no ceiling insulation already in place


• Draught sealing, including weather seals on all external doors, windows and wall vents must be installed at the start of a new lease

Main living areas are already required to have heating. Additionally, from 1 March 2027 at the start of a new lease, main living areas must also have an efficient electric cooling system.

KR Peters Director Peter Nicolls said the changes will further increase the compliance burden for rental providers and their property  managers who are "still trying to come to grips with all the checks you have to do every two years".

He said the government has implemented more than 100 reforms in recent years, most of them favouring renters, with more to come.

"The government says it is being fairer to renters, but at the moment renters are being spoilt rotten. They are getting preferential treatment in all  these changes, and rental providers are hurting.

"I think these latest changes are disgusting. It is okay for homeowners but not for rental providers. I don't understand the discrimination."

According to the government, upgrades a property may need under the new minimum efficiency standards are eligible for a discount under the Victorian Energy Upgrades program. Exemptions also apply, including if installation costs are too high or if there is not enough space.

However, it is not enough to convince Mr Nicolls that the state government considered the cost to rental providers when it drafted the new energy standards.

"If they make it any tougher landlords will abandon property ownership as an investment," he predicted.

"Many are already on the verge of breaking point. Rental providers are not getting a fair crack. If you make it any tougher by the time rental providers meets all their commitments under the law they're not making anything."

To discuss your obligations as a property investor contact the team at KR Peters Officer on 5943 1111 or Wantirna 9800 0000.