Victorian Rental Energy Efficiency Upgrades for Property Managers
From 1 March 2027, new minimum energy-efficiency standards will begin applying to Victorian rental properties.
Climatic can help property managers and rental providers understand the HVAC and hot-water requirements, assess properties and plan compliant upgrades.
Geelong-based | Heating, Cooling & Heat Pump Hot Water | Residential Portfolio Support
What Is Changing From 1 March 2027?
Heating
From 1 March 2027, when an existing fixed heater fails and cannot be repaired, it generally needs to be replaced with an energy-efficient fixed electric heating system serving the main living area. A functioning heater that already meets the existing minimum standard does not need to be replaced simply because the date arrives.
Cooling
From 1 March 2027, an energy-efficient fixed cooling system will be required in the main living area at the start of a new rental agreement or when an agreement converts to month-to-month. From 1 July 2030, the cooling requirement applies to all rental properties.
Hot Water
From 1 March 2027, when an existing hot-water system permanently fails and cannot be repaired, it generally needs to be replaced with an efficient heat-pump water heater or electric-boosted solar hot-water system.
Important: The standards have different triggers and exemptions. Property managers should always check the latest Consumer Affairs Victoria guidance for the individual property.
Does Every Rental Property Need to Be Upgraded in 2027?
Short answer: No.
The new standards do not mean every functioning heater, air conditioner or hot-water system must automatically be replaced on 1 March 2027.
Different upgrades have different triggers.
For example:
- heating upgrades are generally triggered when an existing fixed heating system fails and cannot be repaired;
- hot-water upgrades are generally triggered when the existing system fails beyond repair;
- cooling has a different pathway, including new rental agreements, month-to-month conversions and the broader requirement applying from 1 July 2030.
Some properties may also qualify for exemptions depending on factors such as centralised building systems, heritage restrictions, owners corporation rules or available installation space.
For property managers, the important step is to understand which properties are likely to require action first and plan ahead rather than waiting for a breakdown.
What This Means for Property Managers
Identify properties likely to require upgrades
Older gas heating, outdated cooling systems and ageing hot-water systems can be flagged early.
Plan ahead instead of reacting to breakdowns
Portfolio planning can reduce the pressure of arranging replacement systems after a failure.
Coordinate assessment and installation
Climatic can assess heating, cooling and hot-water requirements and recommend suitable equipment.
Keep property records organised
Consumer Affairs Victoria recommends retaining proof of installation and appliance information.
Consumer Affairs Victoria
How Climatic Can Help
Portfolio Review
Identify properties that may need heating, cooling or hot-water attention.
Property Assessment
Assess the existing equipment, property layout and installation requirements.
Upgrade Recommendation
Recommend suitable reverse-cycle air conditioning or heat-pump hot-water options based on the property and applicable standards.
Quote & Approval
Provide a clear quote for the property manager or rental provider.
Can One Reverse-Cycle System Meet Both Heating and Cooling Requirements?
Potentially, yes. A suitable reverse-cycle air conditioner can provide both heating and cooling, which may allow one system to address both requirements where it meets the applicable efficiency standards for the property.
Climatic can assess the property and recommend whether a single reverse-cycle system is suitable.
Planning for 2027: What Should Agencies Do Now?
Use a checklist:
- Review current heating, cooling and hot-water equipment;
- Record make, model and approximate age;
- Identify properties with no fixed cooling;
- Flag ageing gas appliances;
- Check known owners corporation or heritage restrictions;
- Prioritise properties approaching renewal or month-to-month conversion;
- Obtain indicative assessments where useful;
- Keep records of existing and replacement equipment.
FAQs
Got questions about Victoria’s new rental energy-efficiency standards? Here are clear answers to some of the questions property managers and rental providers are most likely to ask.
Do all Victorian rental properties need new air conditioning from March 2027?
No. From 1 March 2027, the new cooling standard applies when a new rental agreement starts or an existing agreement converts to month-to-month. If a property already has a fixed cooling system, the higher-efficiency replacement requirement is generally triggered when that system fails and cannot be repaired. From 1 July 2030, all Victorian rental properties must meet the cooling standard regardless of lease status.
Do landlords need to replace a working gas heater?
No. A functioning fixed heater does not need to be replaced simply because the new rules start. From 1 March 2027, if the existing fixed heating system fails and cannot be repaired, it must generally be replaced with an energy-efficient fixed electric heating system serving the main living area.
What happens when a gas hot-water system fails after 1 March 2027?
If an existing hot-water system permanently fails and cannot be repaired after 1 March 2027, it must generally be replaced with an efficient electric hot-water system, such as a heat-pump water heater or electric-boosted solar system. A gas hot-water system that is still working properly does not need to be replaced just because the new standard begins.
Are apartments exempt?
Not automatically. Apartments are still covered by the standards, but exemptions may apply where compliance is not practical — for example, if cooling or heating is provided through a centralised building system, there is insufficient space for an outdoor compressor, or installation is restricted by heritage rules or owners corporation requirements. Any exemption should be assessed for the individual property and supported by appropriate records.
Can Climatic assess multiple rental properties?
Yes. Climatic can work with property managers and rental providers to review multiple properties, identify likely heating, cooling and hot-water upgrade needs, assess individual sites and help plan suitable replacement options. This can be useful for agencies that want to prepare their rental portfolio ahead of the 2027 changes.
Are rebates available for rental-property upgrades?
Yes. Victorian rental providers may be eligible for discounts through the Victorian Energy Upgrades (VEU) program. Current incentives include discounts for eligible reverse-cycle air-conditioning upgrades and heat-pump hot-water systems. The amount depends on the existing equipment, replacement system and eligibility, so current offers should be confirmed before work begins.
