Victoria is implementing a significant overhaul of minimum standards for rental properties, with phased reforms rolling out from 1 July 2025 and continuing through 2030. For investors, the changes bring a further round of compliance obligations. However, many investment properties already meet these standards and where they don’t, some forward planning should help streamline the implementation and make the process less burdensome for rental providers. The changes, whilst reasonably extensive, may provide opportunities to lift property value, secure longer-term tenancies, and appeal to renters seeking greater comfort and lower energy bills.
The 2025 Regulations, effective 1 July 2025, introduce new energy-efficiency standards for ceiling insulation, draughtproofing, and cooling, and strengthen existing rules for heating, hot water systems, and showerheads. Compliance is phased in over five years from 1 March 2027 to ease cost impacts and give rental providers time to plan upgrades. The reforms are designed to cut emissions in line with Victoria’s Net Zero 2045 and Gas Substitution Roadmap commitments while improving year-round thermal comfort of homes.
The first milestone arrives on 1 December 2025, when all corded internal window coverings in rental properties must be fitted with tensioning or anchor devices to prevent dangerous loops—an important safety measure for children.
From 1 March 2027, several major energy-efficiency standards begin to apply:
- When an existing heating or hot-water system reaches the end of its life, it must be replaced with an efficient electric alternative, such as a reverse-cycle heating system or a heat-pump hot-water unit.
- At the start of any new rental agreement, or when a lease converts to a month-to-month arrangement, rental providers must install ceiling insulation where none exists and fit 4-star water-efficient showerheads.
- On the same date, new or renewed leases must include a fixed, energy-efficient cooling system in the main living area. The cooling unit must meet at least a 3-star energy rating (or a 2-star central system). If a property already has a non-efficient fixed cooler, it must be upgraded when that appliance reaches the end of its life.
A further requirement takes effect on 1 July 2027, when draughtproofing becomes mandatory at the start of any new lease or month-to-month conversion. Rental providers will need to have sealed external doors, windows and unsealed wall vents to prevent unnecessary heat loss or gain.
Finally, by 1 July 2030, the energy-efficient cooling standard will apply to all rental properties, regardless of when the lease began, unless a specific exemption is granted.
What this means for residential rental providers
Navigating these phased reforms can feel complex, but you don’t need to tackle them alone. Your Kay & Burton Property Manager will support you with:
- Conducting a detailed property audit to identify gaps in insulation, heating, cooling and safety features.
- Develop a tailored compliance plan and timeline so upgrades can be staged well ahead of each deadline.
- Coordinate qualified trades and source competitive quotes, ensuring all work meets government standards.
- Guide you through available rebates and incentives under the Victorian Energy Upgrades program to offset costs.
- Manage communication with renters so upgrades are scheduled smoothly and with minimal disruption.
By partnering with your Kay & Burton team now, you can stay ahead of the regulatory curve, protect rental income, and position your property to attract quality renters well into the future. For more information visit Consumer Affairs Victoria.
In compiling this article, Kay & Burton relied upon information supplied by several external sources. This article has been provided for general information only and has not been tailored to your personal circumstance. Although high standards have been used in the preparation of the information, analysis, views, and projections presented in this article, Kay & Burton does not owe a duty of care to any person in respect of the contents of this article and does not accept any responsibility or liability whatsoever for any loss or damage resulting from any use of, reliance on or reference to the contents of this article.