A set of proposed updates to rental property rules recently introduced by the State Government may mean Victoria’s rental property owners are in for another steep change. 

A consultation process is underway to review the changes, which would be introduced in October 2025 if they go ahead. This latest update will follow major rental law updates the State Government introduced in 2021. 

Proposed changes to minimum rental property standards in Victoria

Suggested updates to rental property rules relate to: 

• Ceiling insulation

• Draught proofing

• Hot water efficiency

• Cooling

• Home safety (in particular cords for blinds)

If the proposed changes are approved, rental providers will need to ensure their properties meet the minimum requirement for ceiling insulation if none is currently installed and include draught sealing, such as weather seals on all external doors.

Rental property providers will also need to replace hot water and heating systems with energy-efficient electric appliances once existing ones reach end of life. This initiative could potentially save renters hundreds of dollars per year on their annual energy bill. 

The proposed new standards mandate a 3-star cooling rating for systems in the main living area, 4-star shower heads in all showers and safety anchors for blind cords.

Conditions will apply. For example, all rental properties will be required to have a fixed cooling system by 30 October 2027. Between October 2025 and this date, changes to cooling systems will be necessary: 

• If there is no existing cooling, where there is a new rental agreement or conversion from fixed term to periodic rental agreement; or

• Where there is existing cooling, at the end of life of the existing cooling system.

Draught-proofing rules will apply where there is a new rental agreement or conversion from a fixed term to a periodic rental agreement.

According to Minister for Consumer Affairs Gabrielle Williams, the proposed standards are aimed at making rental properties safer and more comfortable.

However, the Property Council of Australia has warned the cost of upgrading rental properties will be passed onto tenants, increasing the risk of Victorian investors putting their properties on the market. As reported on the Property Council of Australia website, Victorian Executive Director Cath Evan responded to the proposal by saying, "Victoria is currently in the midst of a severe housing affordability crisis, felt most acutely by renters as they deal with broader cost of living pressures. While we support improvements in living conditions and energy efficiency for renters, owners are already significantly burdened by massive increases in land tax, council rates, insurance premiums, and higher interest rates."

The Government says if a landlord needs to make all these updates, the cost will be $5,000, although some rental property owners dispute this, saying insulation on its own will cost at least $12,000. Other industry experts warn the move will push rental property owners to explore short-term rental options rather than leasing their investment to renters. 

Keep your clients informed

As a property manager, overseeing compliance is a big responsibility, as failing to meet legal obligations can result in fines.

While these changes are in proposal stage, it’s worth sending a newsletter to communicate with your property owner clients about the potential update. If you know older homes on your rent roll do not have ceiling insulation or adequate heating or cooling, you may wish to speak to your clients about making a plan to have the right components installed. Even if the changes do not go ahead, you might want to discuss adding insulation or improving heating/cooling systems to make the home more comfortable and increase the asking price.

With the proposed changes not set to come into force until late next year, there will be time to prepare or spread out the expenses. There may be a need to discuss changing rental prices to cover the costs, but this will have to happen on a case-by-case basis.