Planning Ahead for the 2027 Rental Standards Changes

For rental agreements entered into or created on or after 1 March 2027, new standards will apply to cooling, ceiling insulation, water heaters and showerheads. From 1 July 2027, draughtproofing requirements will also come into effect. While not every property will require immediate works, this next round of changes gives owners a valuable window to assess their property, understand what may be needed, and avoid a rushed approach closer to the deadlines.

Cooling

One of the more significant updates relates to cooling. At the start of a new rental agreement, or when a lease converts to a month-to-month arrangement, rental providers must install an energy-efficient fixed cooler in the main living area. The system must meet a minimum 3-star energy rating, or a 2-star equivalent for central cooling systems. For properties that already have a fixed non-energy-efficient cooler in place, an upgrade will be required when that appliance reaches the end of its life. For homes without any fixed cooling, this is an item to prioritise early, both from a cost and installation planning perspective.

Ceiling Insulation and Showerheads

Ceiling insulation is another important area, and one that may be more involved than it first appears. At the start of a new rental agreement or month-to-month conversion, properties with no existing ceiling insulation must have it installed by an accredited installer, to a minimum R5.0 rating. Importantly, a separate electrical safety inspection of the roof space must be completed within 30 days prior to installation, with any required rectification works carried out before the insulation goes in. Depending on the building type, roof access or ownership structure, this process may take more planning than many owners anticipate.

Also triggered at the start of a new agreement, all showerheads must be upgraded to a minimum 4-star WELS water efficiency rating. This is one of the more straightforward requirements to address, with compliant showerheads widely available and typically low in cost.

Water Heater Standards

From 1 March 2027, when an existing heating or hot water system permanently fails, it must be replaced with an energy-efficient electric alternative, such as a heat pump water heater. This makes it a sensible time for rental providers to identify what iscurrently installed and consider the likely upgrade pathway, even where an existing system is still functioning well.

Draughtproofing

From 1 July 2027, draughtproofing standards will also apply at the start of new agreements. This means sealing or weather-stripping external doors and windows, as well as sealing unsealed wall vents. While it may appear a smaller item, it can still require a careful property review, particularly where gas appliances, heritage restrictions or owners'corporation requirements are involved.

What Owners Can Do Now

The key message is simple: now is the time to review, not rush. Owners are encouraged to speak with their property manager to understand which standards apply to their property and when, seek quotes for any likely upgrades sooner rather than later, explore available government grants and rebates through the Victorian Energy Upgrades program, and where applicable, begin the process of obtaining owners' corporation approval for any works that require it.

Taking a proactive approach now will help avoid delays, reduce costs and make future compliance far more manageable.

If you are unsure how these upcoming changes may affect your investment property, Marshall White's Property Management team can help you understand what to look for and how to plan ahead with confidence.