Victoria is moving towards full electrification of residential rental properties, with new minimum energy efficiency and safety standards set to take effect from 2027.
While the phased timeline isn’t imminent, rent roll owners and property managers need to start thinking now about how these mandatory changes will impact compliance, costs and asset value.
What’s changing - and when?
From 1 March 2027, rental providers will need to ensure their leased investment properties meet new energy efficiency standards for heating, cooling, hot water, ceiling insulation, shower heads and draughtproofing.
Here's what will trigger the required upgrades:
End-of-life systems: When heating or hot water systems fail, they must be replaced with energy-efficient models
New or rolling lease agreements: From March 2027, new rental agreements or conversions to month-by-month tenancies will trigger mandatory upgrades to:
Install ceiling insulation (where none currently exists)
Fit 4-star shower heads
Add fixed energy-efficient cooling in main living areas
Draughtproof all external doors, windows and unsealed wall vents.
To add to this, by 1 July 2030, all rental properties must have energy-efficient cooling installed in the main living area, regardless of when the tenancy commenced.
Why this matters for rent roll owners
The upcoming standards will create a clear divide between compliant and non-compliant properties, and this will directly affect the value and manageability of a rent roll for the following reasons:
Transaction-readiness: Buyers will examine energy compliance as part of rent roll due diligence. Properties which do not meet the new standards may attract retention penalties or require pricing adjustments
Operational complexity: Non-compliant properties will need closer oversight. Assignments and lease renewals will trigger upgrade obligations, meaning more admin and more interactions with rental property owners
Property owner relationships: Property managers will need to liaise with property owner clients, manage expectations and help them navigate available rebates. Clients who aren’t prepared to invest in upgrades may have to be let go in order to reduce compliance-related problems
Asset depreciation: Older, gas-reliant or inefficient properties may affect the value of the rent roll if they aren’t upgraded, particularly after 2030 when compliance will apply to all properties, not just new agreements.
New minimum energy efficiency and safety standards: Are there rebates or exemptions?
The Victorian Energy Upgrades program will offer rebates to help rental providers cover the cost of required improvements, including ceiling insulation (expected to be available by early 2026). This will help ease the financial burden, especially across larger portfolios.
Exemptions will apply in some cases, such as:
Apartments where heating or cooling is supplied centrally
Heritage-listed properties
Buildings with owner corporation restrictions
Instances where upgrade costs would be unreasonably high
However, exemption requests must be assessed carefully, and they won’t apply in most standard residential cases.
What about safety standards?
Alongside energy upgrades, the new regulations include updated safety requirements.
From 1 December 2025, all corded internal window coverings must have anchors installed to secure cords and prevent safety risks to children. This applies to all residential rental properties and is non-negotiable.
For rooming houses, new fixed heating requirements come into effect in two phases (2024 and 2025), with a final energy efficiency standard applying from 2030. These too form part of the broader electrification push and may require additional investment from operators.
What should rent roll owners do now?
You can review the new standards in detail here, but in the meantime:
Audit your portfolio: Identify which properties already meet the new standards and which will need upgrades
Plan for the triggers: Understand how lease renewals and system failures will activate compliance requirements
Communicate early: Start educating property owners now, particularly around timelines, rebates and long-term benefits
Keep records: Detailed documentation will help during due diligence if you’re planning to sell or grow your rent roll.
The shift to better quality rental properties in Victoria is coming soon. Rent rolls which adapt early will be more valuable, easier to manage and better aligned with the expectations of both regulators and renters.