Blog | 3rd Jul, 2017

Four reasons rental standards make sense

Whenever we talk about the idea of minimum standards for health, safety and efficiency for rental properties, most people agree we need to do something to fix the current situation. The generally poor efficiency of rental homes is having significant affordability, health and wellbeing impacts on renters, while all that wasted energy is adding to Victoria’s climate pollution.

What we’re calling for is simple and common sense: all rental homes should be liveable homes. It also has benefits for tenants in the form of better housing, health and quality of life. But concerns are sometimes raised about the possible adverse consequences, such as the risk of standards leading to higher rents and evictions, or imposing unreasonable costs on landlords.

While these concerns are understandable, the reality is that done properly in a staged and orderly way, these risks are small while the potential benefits for a wide and growing cross-section of our community are very large.

Here’s how rental standards can be designed to address these concerns.

1. Most landlords can easily meet the standards

Firstly, we are proposing that standards initially be set low, at a level which targets the worst performing homes which no member of our community should be expected to live in. In other words, introducing standards doesn’t meant that every landlord in the state will be suddenly required to meet an onerous set of obligations overnight.


Standards would initially address basic issues like secure locks on external doors, safe electric and gas connections, basic weatherproofing and the presence of insulation…


We expect this first set of standards would address basic issues like secure locks on external doors, safe electric and gas connections, basic weatherproofing and the presence of insulation. While available data is incomplete, we expect this represents around 10 percent of the rental housing market. The majority of landlords who already recognise the benefits of keeping their properties in good repair would have little difficulty in meeting these initial standards.

2. Bringing rental houses up to scratch slowly

Once the worst-performing properties are brought up to scratch, the next challenge is to bring the rest of our rental housing stock up to a reasonable level of efficiency performance. Victoria’s housing stock is pretty inefficient by world standards – a legacy of our historically low energy prices – but rental housing stock is generally even worse.


Standards would be initially set low, targeting the wost-performing homes. Most landlords will meet them easily already.


While standards for new buildings have been progressively raised over the last two decades and many home-owners are responding to rising prices and more extreme weather by investing in efficiency improvements, there is currently nothing to encourage the same improvements for rental homes, most of which were built prior to modern building regulations.  With energy prices skyrocketing and an increasing number of households including families locked out of home ownership and renting long-term, this historical legacy of poor efficiency is having a significant impact on cost of living and quality of life for a sizeable and growing proportion of our community.

So once the initial set of standards are in place, they need to be progressively raised over time to encourage investment in efficiency features which tend to be less visible and often not a high priority even in well-maintained and otherwise good quality homes.

3. A rating tool for cost-effective measures

Energy efficiency features include measures such as insulation to a defined standard (eg. R3.5), good draught-sealing, end-of-life replacement of fixed appliances such as hot water and heaters with efficient models, and efficient lighting.  It would make sense for these subsequent standards to be linked to a rating tool such as the Victorian Residential Efficiency Scorecard, currently under development by government, so that obligations represent a cost-effective mix of measures tailored to each home.


From April 2018 landlords in the UK will be banned from renting out homes which fall into the lowest Energy Performance Certificate bands


Such a scheme has recently been implemented in the United Kingdom, where from April 2018 landlords will be banned from renting out homes which fall into the lowest Energy Performance Certificate bands of F and G.

4. A gradual and orderly roll out

The standards would kick in either at the start of a new lease, or by a specified date set well in advance.  With the average lease in Victoria lasting around 15 months, that would see a gradual and orderly roll-out of the standards over several years, avoiding any justification for evictions.  Communicating compliance dates well in advance would also give landlords the opportunity to spread investment over several years if necessary, thus minimising pressure on rent increases.  We are also proposing some extra protections against rent increases to be included in the legislation, such as mandating maximum annual increases or allowing tenants to challenge increases which are disproportionate to actual costs of compliance.


The standards would kick in either at the start of a new lease, or by a specified date set well in advance.


Rental standards will benefit the majority

There will always be people who oppose all forms of regulation, and not all tenants have always behaved well either. But we should not let the poor behaviour of a minority of tenants and landlords stand in the way of sensible reform which will make a significant difference – not only by improving quality of life for people who rent, but also by helping Victoria meet its emission reduction targets.