Simon uncertain, what's energy efficiency to you?

Chop71 said :

FFS – more red tape for the nanny state.

As much as this could be a “good idea” I’m sure when landlords pass on the cost to renters, you will be the same people who complain about the cost of renting and housing in Canberra

FFS relax. It is a survey to see if renters actually care.
Nothing has been done yet. You need to know if the renters will use the info first, and if they want it, why cant they have it. Although as previously mentioned, not the market where someone looking for a rental can be knocking them back.

Chop71 said :

throw in a line and a graph and you must be right. eh

Hardly, it’s a pretty fundamental principle.

Chop71 said :

Some would argue the renters are the price takers not the landlords?

In a competitive market both are, and the market sets the price (i.e. prices are determined by the interaction of total demand and supply of the good or service). Any individual buyer or seller has zero impact on the market price.

This is in contrast to markets where individual firms/consumers have market/monopoly power. Companies like Coles, Microsoft, etc. and consumers like the Federal Government aren’t price takers, because they’re big enough to influence the market/have market power. They do face sloped demand/supply curves.

The market for rental accommodation however, is made up pretty much entirely of tiny suppliers and consumers, and none of them have any market power.

Chop71 said :

In your search for a rental property (as you mentioned you’d be happy to pay more) have you ever negotiated down (or up) the rent you’d like to pay?

I doubt it.

Well actually, I was looking for a new rental about four months ago. I negotiated one landlord down from $380/pw to $350pw (the property had last rented for $390pw).

It’s actually beside the point though, because both those prices were above the market price. I moved on to another property, and the landlord didn’t get a tenant until they dropped the price to $300.

It really is as simple as supply and demand.

We’d love to hear from all renters! Fill out the short survey that will only take minutes to complete – https://www.surveymonkey.com/s/surveyforrenters

throw in a line and a graph and you must be right. eh

Some would argue the renters are the price takers not the landlords?

In your search for a rental property (as you mentioned you’d be happy to pay more) have you ever negotiated down (or up) the rent you’d like to pay?

I doubt it.

Awesome idea in theory… Though most of the time EER’s aren’t worth the paper they’re written on.

They’re only as good as the information that goes into them and it’s so often the case that a client’s EER says one thing (eg good ceiling insulation) and when we stick our head in the roof we find something completely different (eg finding the installer couldn’t be bothered installing batts in the tight areas and the EER bloke couldn’t be bothered going past the manhole to check what’s really there).

Realistically though, when the companies doing the ratings are throwing in an EER for free when you purchase a building and pest report, what more would you expect?

breda said :

.. there is not a skerrick of evidence to support the notion that EER ratings have a significant effect on people’s decisions on whether or not to buy a home. And, as people have pointed out above, there is no evidence that it would override factors like location, price and amenity for renters either.

My house, for reasons known only to the alchemists who decide these things, has an EER of 3. It faces perfectly north. The living areas and my bedroom are warm in winter and cool in summer. The bits I don’t use much are the reverse. So what? I worked all that out before I bought it by looking at the house in situ and checking on a map for the orientation….

I agree with your first two points and, in years past, would probably have agreed with your third point. Now, having lived in a house that is probably five+ stars, I would never again want to live in a house in Canberra with a lower rating. There are no cold or hot rooms and, as well as the substantial energy savings each year, there is an unquantifiable comfort level that can’t be provided by artificial pockets of heating or cooling.

Your ability to ascertain whether your house faces North is commendable but many don’t even have the skills to do that. Also, while I agree that EER is somewhat subjective, your inability to understand, or at least question, why your own house only rated a 3 rather than perhaps a 5 or 6, is suggestive of the need for more information to be provided to prospective tenants.

An EER of 5, as our house is supposed to be, is totally and utterly a stab in the dark. How can a house with an EER of 5 end up costing in excess of $500/quarter for natural gas alone, which only heats the living space for 8 hours of the day/night whilst the bedrooms are freezing cold? This is a house built new in 2009 of all things. I improved the EER myself by installing two split A/Cs instead of the “5 star” gas wall furnace, supplying heat AND cooling at a fraction of the cost of the original heating only appliance. I honestly think the building company had the approval people in their back pocket. With the corruption we see in our regulatory authorities to date, I can only see this new idea as another gimmick that will only see the developers and inspectors win, whilst tenants sit in their freezing living rooms wondering where all the warmth has gone.

wildturkeycanoe said :

Economics 101 is lost when you, as a landlord, can get another $50-100/week for your home if there is solar power on the roof, or the insulation has given it a 5 star energy rating. Why would any landlord spend thousands on their property with no way to make the money back, especially when the property already makes a mint without doing anything to it? When the government starts to subsidize these initiatives though, it’ll be another story altogether.

I’m not sure what your point is.

As a renter, I’d be willing to pay a premium for an energy efficient property because it’ll save me thousands of dollars a year in energy bills.

What makes you think that landlords wouldn’t make their money back. Energy improvements already increase the capital value of a house, and under the proposed scheme, they’d increase the rental income as well. Considering most landlords are losing money on their investment properties, I think it’d be something most would consider.

The only reason this doesn’t happen already is because information is asymmetrical, and renters can’t tell the difference between a property that is an energy drain, and one that is efficient.

Chop71 said :

Pfff
I hope you can follow me now that you bought up Economics 101

This simple subject covers elasticity of demand, which will state some of these costs are passed on to renters while a portion of the cost will be absorbed by the landlord.

Yeah, nice try, but you’re not even close.

In a competitive market, the market as a whole will have a sloped demand curve, but individual firms (landlords) don’t have market power, are price takers and face what is essentially a completely flat demand curve.

Chop71 said :

There is also the cost of the red tape that is burdened by the ACT government public service that all ratepayers cover.

So yes there will be additional costs, some paid by the landlord, some paid by the renters and yes all of us will pay a small portion so that Mr Corbell can feel warm and fuzzy telling us how “green” our rental properties are.

Do we need it?

It depends what is being proposed, if for example all that happens is rentals that already have EERs are required list them when they’re being advertised for rent, the administrative burden and cost to anyone is next to nothing.

On the other hand, such a requirement would go a long way to correcting the information asymmetry in the market for rental properties, which is actually correcting a market failure and an efficiency improvement.

Ghettosmuf87 – you’re new around these parts, right?

Reprobate said :

“The ACT Government wants to find out if tenants would take into account the energy efficiency of homes when choosing rental properties, Minister for the Environment and Sustainable Development, Simon Corbell, said today.”

Dear Simon: No. Yours sincerely, the voters of the ACT.

P.S. Now please get on with running our glorified city council without bending over and saying “give it to me, big boy” every time your solitary Green MLA mate comes up with a fluffy Utopian thought bubble. You CAN say no to him, it’s not like he’s going to take his bat and ball and let the Libs take over the reins any time soon…

Dear Reprobate,

You speak for yourself, no one else.

You are but one person, not an elected official who can at the very least claim to represent those who voted for them.

Bugger off putting words in other peoples mouths.

Your answer should read:

Dear Simon, No. Reprobate.

“The ACT Government wants to find out if tenants would take into account the energy efficiency of homes when choosing rental properties, Minister for the Environment and Sustainable Development, Simon Corbell, said today.”

Dear Simon: No. Yours sincerely, the voters of the ACT.

P.S. Now please get on with running our glorified city council without bending over and saying “give it to me, big boy” every time your solitary Green MLA mate comes up with a fluffy Utopian thought bubble. You CAN say no to him, it’s not like he’s going to take his bat and ball and let the Libs take over the reins any time soon…

You’d think the ACT Govt would actually take some steps to reduce red tape, rather than constantly creating more of it. What a pack of turkeys!

Pfff
I hope you can follow me now that you bought up Economics 101

This simple subject covers elasticity of demand, which will state some of these costs are passed on to renters while a portion of the cost will be absorbed by the landlord.

There is also the cost of the red tape that is burdened by the ACT government public service that all ratepayers cover.

So yes there will be additional costs, some paid by the landlord, some paid by the renters and yes all of us will pay a small portion so that Mr Corbell can feel warm and fuzzy telling us how “green” our rental properties are.

Do we need it?

Three wrong assumptions here.

The first is that EER ratings are reliable and relevant. There is plenty of criticism of the methodology used to rate the efficiency of buildings. It is far from an exact science, to put it mildly.

Secondly, the EER rating, even if it were accurate for a dwelling as a whole, does not take into account the usage pattern of the rooms. It really doesn’t matter if the spare room or junk room is freezing in winter and boiling in summer. In my house, those rooms serve that function precisely for that reason.

Thirdly, despite the bleatings of the ACT Government, there is not a skerrick of evidence to support the notion that EER ratings have a significant effect on people’s decisions on whether or not to buy a home. And, as people have pointed out above, there is no evidence that it would override factors like location, price and amenity for renters either.

My house, for reasons known only to the alchemists who decide these things, has an EER of 3. It faces perfectly north. The living areas and my bedroom are warm in winter and cool in summer. The bits I don’t use much are the reverse. So what? I worked all that out before I bought it by looking at the house in situ and checking on a map for the orientation.

It’s just another bit of red tape which adds no value, but costs us all more. Just another crumb off the cupcake nibbled by these insatiable mice in the bureaucracy.

Absolutely, yes they should provide EER information to prospective tenants. The “more red tape” comment is a bit silly, given you only have to get the inspection done once to get your EER certificate and then again if you make any improvements to the property. And it doesn’t cost all that much either.

It’s been a while since I had to look for a rental (halleluiah) but when I did the last couple of times there is no way that I could’ve been that picky to filter by EER. Even when the market is a bit slow, if you add some unpopular specifics like being single, having a child or pets or working part-time or casual, etc, you’ll still find yourself at the bottom of the list for most properties.

I also don’t think it is fair that tenants “should know from looking at it” what a rental’s energy costs are going to be like. Even the specific brand and model of heater or hws can make a massive difference. And you can’t tell if the walls and roof are adequately insulated either from looking at them from the outside. Which is why you need to pay an expert to assess this to get an EER certificate.

arescarti42 said :

RedDogInCan said :

Whilst the idea has merit, it won’t make a lick of difference simply because the supply of rental housing is tight. I mean, its not like properties are sitting vacant and tenants get to pick and choose because of an over supply. Even the worst energy efficient house is better than living in a car.

I can’t tell if you’re being sarcastic or not.

“properties are sitting vacant and tenants get to pick and choose because of an over supply” is exactly what is happening at the moment.

Asking rents are falling across the board because of excess supply.

Chop71 said :

FFS – more red tape for the nanny state.

As much as this could be a “good idea” I’m sure when landlords pass on the cost to renters, you will be the same people who complain about the cost of renting and housing in Canberra

That’s not how it works, landlords can’t just “pass on the cost.”

Rents are determined by the market, not by the costs faced by landlords. Setting rents higher than the market price is a good way to end up with a vacant property

This is economics 101 stuff.

Economics 101 is lost when you, as a landlord, can get another $50-100/week for your home if there is solar power on the roof, or the insulation has given it a 5 star energy rating. Why would any landlord spend thousands on their property with no way to make the money back, especially when the property already makes a mint without doing anything to it? When the government starts to subsidize these initiatives though, it’ll be another story altogether.

Great idea, benchmarking is a great way to create competition and is valuable in informing the customer….absolutely create the tenancy EER rating system for rental properties.

We all know electricity prices will continue to increase; forcing the hand of the owner now means standards have to improve and the benefits will filter to the customer.

EER values are an important factor when purchasing a home and should be the same for rental properties.

The anticipated outcome of this scheme can be compared to the discolsure of EER values in commercial buildings. Energy efficient commercial buildings are now the norm with efficiency targets on the increase. Those buildings which choose not to make improvements are the ones that have the ‘For Lease’ sign out the front….you just have to drive down Northbourne Ave to witness this.

…..lets stop debating it and get on with it i say.

Given that since 1999 all new houses and houses on the market need to have EER info, surely many property owners would have this information already.

An idea like this will achieve nothing. The older places are colder, the newer places less so. A few new places will be cold too.

When you inspect you can easily tell whether a property/room will get sun or not, and what the heating is.

Arescarti is correct in saying that rents are determined by the market. It’s worth being aware, though, that when landlords get an opportunity to increase rent, pushing extra costs on them just makes them that much more determined to squeeze every drop out. I tend to go easy on rental increases because I want to retain good tenants, but having an extra cost increases the likelihood of passing on a full rise to make up for it.

Good idea in principle, however due to the cost if implemented it would surely decrease the quantity of rental properties in Canberra and increase the rental price.

I think this is an excellent idea. When moving into any new residence regardless of it’s age the hidden costs are always well hidden. To give all consumers a fair and level playing field, the full cost of living should be a disclosed to the consumer where ever possible. How could one possibly budget their financial future without those costs.

RedDogInCan said :

Whilst the idea has merit, it won’t make a lick of difference simply because the supply of rental housing is tight. I mean, its not like properties are sitting vacant and tenants get to pick and choose because of an over supply. Even the worst energy efficient house is better than living in a car.

I can’t tell if you’re being sarcastic or not.

“properties are sitting vacant and tenants get to pick and choose because of an over supply” is exactly what is happening at the moment.

Asking rents are falling across the board because of excess supply.

Chop71 said :

FFS – more red tape for the nanny state.

As much as this could be a “good idea” I’m sure when landlords pass on the cost to renters, you will be the same people who complain about the cost of renting and housing in Canberra

That’s not how it works, landlords can’t just “pass on the cost.”

Rents are determined by the market, not by the costs faced by landlords. Setting rents higher than the market price is a good way to end up with a vacant property

This is economics 101 stuff.

Perhaps the government could have someone go around the city and do an energy efficiency audit (or whatever you call it) on every single dwelling and publish it on a website somewhere. Then if you upgrade something you could pay to get it improved (if you care at all).

FFS – more red tape for the nanny state.

As much as this could be a “good idea” I’m sure when landlords pass on the cost to renters, you will be the same people who complain about the cost of renting and housing in Canberra

Whilst the idea has merit, it won’t make a lick of difference simply because the supply of rental housing is tight. I mean, its not like properties are sitting vacant and tenants get to pick and choose because of an over supply. Even the worst energy efficient house is better than living in a car.

This is a really excellent idea.

I’ve always wondered why you’re required to provide efficiency ratings when selling a house, but not when leasing it.

The difference in operating costs between an efficient, and inefficient house is massive, particularly in a climate like Canberra’s.

Probably the key to making it a successful initiative will be ensuring that providing that information doesn’t impose unreasonable costs on landlords.