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Rickety rental homes too costly to heat or cool
Why Australian rental properties need minimum energy efficiency standards.
Last updated: 10 Dec 2025
Need to know
- 70% of renters avoid using heating or cooling because of their effect on energy bills, and 40% say that they can’t keep their homes at a comfortable temperature
- Homes built before 2005 – when efficiency standards were introduced – are estimated to average around 1.8 stars, and many of these would be rental properties
- Energy Consumers Australia is calling on the federal government to mandate minimum energy efficiency standards in rental properties
How energy efficient your home is can have a massive impact on your energy bills, which probably explains why over three-quarters of owner-occupied homes in Australia have some form of insulation.
For new homes, the energy efficiency requirements under Australia’s Nationwide House Energy Rating Scheme (NatHERS) went from six to seven stars (out of 10) in 2022, a move that is expected to save owners of new homes about $183 on their power bill every year. Energy ratings for existing homes remains a work in progress.
Achieving a seven-star rating entails a number of measures, including choosing a building site with both shade and solar access, double or triple glazing the windows, having a lot of internal doors so you can create sealed temperature zones, insulating extensively, and having lots of ceiling fans.
Homes built before 2005 – when efficiency standards were introduced – are estimated to average around 1.8 stars
Rental properties generally have few or none of these features, which may explain why renters are far more likely to have trouble paying their energy bills. (Recent data from the Australian Energy Regulator revealed that 336,615 households were in energy debt last year.)
Homes built before 2005 – when efficiency standards were introduced – are estimated to average around 1.8 stars. Many of these would be rental homes, of which only around 11% have rooftop solar.
Australia, in fact, has some of the least energy-efficient homes in the developed world. Upgrading a home to seven stars can decrease electricity costs by $1500 to $4000 a year, depending on its size and the state or territory it’s in, but landlords would need an incentive to do this other than an ethical imperative.
Most renters can’t afford to pay for comfort
New research from the advocacy group Energy Consumers Australia (ECA) reveals that 70% of renters avoid using heating or cooling because of their effect on energy bills, and 40% say that they can’t keep their homes at a comfortable temperature without facing big energy costs.
ECA is calling on the federal government to mandate minimum energy efficiency standards in rental properties in all states in territories. According to the organisation’s most recent research, around two-thirds of Australians agree with this position.
The change in how much heating and cooling is needed because of the energy efficiency features of the building is extremely significant
ECA executive manager of advocacy and policy Dr Carol Valente
ECA executive manager of advocacy and policy Dr Carol Valente tells CHOICE that a four-star home in Sydney or Melbourne uses about one-third of the energy for heating and cooling as a one-star home, and a seven-star home uses about half of what a four-star home would use.
All that extra energy costs a lot of money. And with only 36% of rental homes having any form of insulation, you can see why renters tend to keep the air con off.
“The change in how much heating and cooling is needed because of the energy efficiency features of the building is extremely significant, and heating and cooling represents about 40% of an average household energy bill,” Valente says.
Efficiency standards the exception
Valente applauds the steps that have been taken in some jurisdictions, but they are few and far between.
The ACT government requires ceiling insulation in rental homes, and in Victoria new minimum energy efficiency standards for rental homes will be phased in from March 2027, including insulation, drought-proofing, and efficiency ratings for hot water, heating and cooling systems.
“None of the other states and territories in Australia have any enforceable energy efficiency requirements for rental homes, and what’s more concerning is that some of those jurisdictions haven’t even started to think about them. There is very little political pressure on this,” Valente says.
In South Australia, the state government recently voted down a proposal to introduce such measures.
As it stands, more than two million rental homes in Australia are located in places without enforceable energy efficiency standards. One obvious reason for the resistance to upgrading is the cost to landlords.
Valente says the focus should be shifted to the hidden costs of not introducing standards.
“We know that when it comes to energy efficiency there are a lot of flow-on benefits in terms of physical and mental health and well-being and productivity that are often hard to quantify and measure but that are important to take into account,” Valente says.
Australia lagging behind comparable countries
ECA is calling on the federal government to apply the NatHERS ratings to rental homes, and make those ratings available to prospective renters.
It’s a system that’s already in place in other countries. In 2018, the UK introduced the Energy Performance Certificate (EPC), which rates rental properties on a scale of A (best) to G (worst). This information is disclosed to renters.
Since 2020, landlords in the UK have been prohibited from renting properties with a rating below E. The EPC is also used in France, where G-rated homes were banned from the rental market starting in 2025.
“This creates accountability and gives landlords a clear market signal and a timeline to make the upgrades happen and It also makes it easier and simpler for renters and real estate agents and all the stakeholders involved to understand whether the property is compliant or not,” Valente says.
