Navigating Victoria’s new rental standards: Advice for landlords and investors

Earlier this year the Victorian government announced new minimum rental standards in a bid to provide the State's tenants with more comfortable and energy efficient living arrangements. Whilst this may be a welcome relief for renters, it comes with a new set of challenges for landlords and investors, many of whom are confused about what the changes mean for them.

Understandably there is also concern amongst property owners about the costs involved in making these necessary fixes and what impact it will have on already rising rents. Victoria's Energy Minister estimates it would cost $5000 to make all these upgrades at once.

Although not all detail is known let's break down the new standards to see what property owners need to be aware of.

Insulation

Properties must have adequate ceiling insulation and draught proofing through weather seals on external doors. It's not clear what this will mean for apartments as an example.

Energy Efficiency

Hot water and heating systems must be replaced with energy-efficient electric appliances once they reach end of life. A minimum 3-star cooling rating will also be required for systems in the main living area, installation blind cord anchors and 4-star shower-heads in all showers.

Most of these changes stem around energy efficiency with landlords expected to make these changes at the start of a new lease or at the end of an appliance's lifespan. To assist with these upgrades, landlords can access discounts through the Victorian Energy Upgrades (VEU) program, which offers financial incentives for replacing old gas appliances with more efficient electric ones. 

It's critical landlords act now to start making changes to their properties while the new standards are phased in. Penalties will start being enforced from October 2025, but we're finding there's still a lack of awareness and understanding from Victorian property investors about their obligations under the previous rental reforms that came into effect back in 2021. These earlier changes aimed to improve the basic living conditions in rental properties and landlords whose properties fail to meet the requirements are risking fines of up to $57,000 for companies and $11,000 for individuals.

Here are the top things you should ensure your property has before bringing it to market:

1. Energy-Efficient Heating: Rental properties must have an energy-efficient fixed heater in the main living area, which aligns with the push toward greener, cost-saving solutions for tenants.
2. Mould and Damp Prevention: Properties must be free of mould and damp caused by structural issues. Addressing these problems not only meets legal standards but also reduces maintenance costs in the long run.
3. Ventilation: Adequate airflow in habitable rooms, including bathrooms and laundries, is mandatory. Installing exhaust fans in wet areas will prevent moisture buildup and improve tenant comfort.
4. Window Security and Privacy: Bedrooms and living areas must have curtains or blinds that block light and provide privacy, with external windows fitted with functioning latches for security.
5. Secure Entry Doors: All external doors must have functioning deadlocks or locks that can be unlocked from the inside without a key, while providing adequate security from the outside.
6. Bathroom and Kitchen Compliance: Bathrooms must have a washbasin, and showers must have water-efficient showerheads. Kitchens need at least a stove with two burners, and both kitchens and bathrooms must have access to hot and cold water.
7. Structural Integrity: Rental properties must be structurally sound and weatherproof, ensuring long-term durability and tenant safety.
8. Toilet in Good Working Order: It is essential that toilets are fully functional to avoid common tenant complaints.
9. Bins for Waste Management: Landlords must provide both rubbish and recycling bins to ensure tenants can easily manage their waste.

Alongside compliance with these legal standards, presenting your property well is key to attracting tenants:

• Cleanliness: Ensure that the property is thoroughly cleaned, with special attention to high-use areas such as kitchens and bathrooms.
• Tidy Gardens: Keep lawns and garden beds well-maintained to make a strong first impression during inspections.
• Address Maintenance Issues: Fix any known maintenance issues before listing your property, signalling that you are a responsible and proactive landlord.
• Power On for Inspections: Having the electricity running during inspections allows you to showcase the property in its best light, making it feel inviting and functional.

By staying informed of both the 2021 reforms and the upcoming 2025 changes, you'll ensure your property meets compliance requirements while remaining competitive in a dynamic rental market.

Image by DEBJIT BHOWMICK via Unsplash