9 November 2022

Insulation to be mandatory in rental properties from 2023

| Ian Bushnell
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Man installing insulation

Up to 35 per cent of heat is lost through the ceiling over the colder months in an uninsulated house. Photo: File.

A new regulation requiring landlords to install insulation in their rental properties will be a lifesaver in Canberra’s bitter winters, according to a tenant advocate.

The ACT Government’s new minimum energy efficiency standard for ACT rental properties will be phased in from April next year so tenants will be more comfortable and healthy in Canberra’s weather extremes.

The phase-in period will last until 30 November 2026, but landlords will be required to meet the standard within nine months of a new lease being signed for the property.

From 1 December 2026, properties will need to comply or be in the process of complying, regardless of whether a new lease has been signed, and new properties entering the rental market will have three months to comply with the standard.

Rental homes without ceiling insulation or with insulation rated less than R2 will require new insulation to be installed or upgraded to R5, the level typically used in new builds.

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The government says that from 1 April 2023, it will also be mandatory for landlords to say whether their property meets the minimum standard in all advertisements and new residential tenancy agreements.

Better Renting executive director Joel Dignam said the new regulation was a positive first step towards ensuring healthy homes for people renting in the ACT. He said it would make a big difference for many people renting in the ACT.

“It’s literally going to save lives in cold winters, and with the energy crisis, it’s going to help with energy costs,” he said.

Mr Dignam said sealing homes properly to keep out draughts, proper window treatments and moving to energy-efficient appliances, particularly switching to electric reverse-cycle systems from inefficient gas heaters, should also be on the table.

Landlords will be assisted in upgrading their properties through an expanded Sustainable Household Scheme which will make insulation an eligible product and offer zero-interest loans of up to $15,000 to cover the cost of installation.

But the Real Estate Institute Institute of the ACT has previously expressed concerns that some landlords will sell their properties rather than pay to upgrade them or increase rents to cover the cost, worsening Canberra’s already parlous rental market.

REIACT’s Alex Scott said this would be another impost on landlords that could drive investors out of the market.

“The impacts are potentially taking more properties off the market and rents increasing as a result of less supply and more financial demands on owners that they will try to recover,” she said.

Ms Scott said there were also a number of unknowns the industry would have to deal with.

“Part of the difficulty will be fulfilling the obligation to have the property insulated to the capacity that’s required in the timeframe,” she said.

“Who will determine whether or not it is required? Industry is not qualified to do that. Do we have enough trades to do it? What will the impositions be on the owners? Does the property need to sit vacant until such time it becomes compliant.

“There’s just a lot of balls in the air.”

Mr Dignam said it was unclear what impact the new regulation would have on the market.

He said if a landlord did decide to sell, the home would remain in the housing supply either as a rental home or owner-occupied, which would probably mean one less rental household.

“There’s going to be a period of transition, but we need a rental sector where landlords are going to have the responsibility to provide a decent home, and people who don’t want to meet that responsibility shouldn’t be in this game,” he said.

The ACT Government says more than 60 per cent of rental homes already comply with the standard.

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Mr Dignam welcomed news the government will monitor and evaluate the implementation of the new standard.

“We hope that landlords will comply with these new requirements without renters having to go to the ends of the earth to enforce their rights. If not, it may be necessary for the government to take a more hands-on role in ensuring compliance,” he said.

Chief Minister and Minister for Climate Action Andrew Barr said the new standard would improve the well-being of Canberra renters, as well as help reduce their cost of living.

“We know that upgrades like these can be costly, which is why we have programs such as the Sustainable Household Scheme in place to help reduce those costs,” he said.

“Getting landlords on board is another big step towards ensuring all Canberrans benefit from a zero-emissions future for the ACT.”

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Minister for Energy and Emissions Reduction Shane Rattenbury said insulation was the most effective and efficient way to quickly improve energy efficiency in rental properties.

“Many renters in the ACT live in housing that is not well insulated and this impacts their health, comfort and happiness at home. It’s unfair that those with the least capacity to pay often live in properties that are the most expensive to heat and cool,” he said.

“Up to 35 per cent of heat is lost through the ceiling over the colder months in an uninsulated Canberra house.”

Mr Rattenbury said the phase-in period and no-interest loans would assist rental providers in satisfying the new requirements in a balanced way.

The government would also invest in public housing energy efficiency improvements, including replacing gas appliances such as hot water and heating and cooling systems with energy-efficient electric alternatives that were cheaper to run and support the ACT’s transition from gas by 2045.

Mr Rattenbury said government would continue to examine other energy efficiency measures that could be implemented in future years.

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Sounds very dodgy to me. So if one townhouse in a complex (of say approximately 20 townhouses) is forced to put in more roof insulation because it is a rental property, that particular townhouse will now be at a much higher standard than any other townhouse in the complex. That one townhouse is now being required by law to have more roof insulation than any other townhouses in the complex. One townhouse is required by law to be of a higher standard than any other townhouse in the complex. You are kidding, right? Talk about ongoing rubbish by this ACT govt, and ongoing discriminatory legislation.

So the renter will have a higher standard of living than any other person who lives in the complex. What a joke. It is not about ‘saving lives’ at all (as ignorantly mentioned in the article above), but rather it is about giving renters a far higher standard of accommodation compared to many others in the community. Sounds to me like it’s really the ACT government doing some sort of mates deal with private companies, as they are forcing certain people (making it mandatory for only certain people in the community like landlords) to be forced to pay for these services (which the landlords don’t want and never asked for). It is dodgy dealings yet again by the woeful and corrupt ACT government.

William Newby6:55 am 12 Nov 22

How does Barr believe this will reduce the cost of living?
When any investor is forced to increase the service currently offered they will naturally seek to recover costs with higher rents; as we saw with land tax, rents went up to cover these business costs.
The only real influence that I could see this policy having is that it might push a few landlords with older homes to put them onto the market a little sooner than they had planned, or to knock down and rebuild with a duplex.
Which in turn will also drive up rental costs replacing an old Govie with a brand new home, built to 2023 EER standards but also with a 2023 price tag = old $600/week rentals become shiny new $1,000/week rentals.
Again squeezing the bottom end of the market, students, homeless, beneficiaries.
“Reduce the cost of living” – pull the other one Andrew.
Even with what has been proposed, insulating the roof only in these old homes still leaves you with a home that has poorly insulated walls, and no insulation at all beneath those timber floor boards, ineffective! Who will police this? This is just more tinkering without taking any real steps to make effective change.
Release more land build more homes!

devils_advocate12:57 pm 12 Nov 22

Too true. Will be a developer’s dream picking up these old dilapidated houses that are uneconomical to upgrade, but the owners lack the capital to redevelop.

“How does Barr believe this will reduce the cost of living?”

He doesn’t. The government wants to keep property prices high to get high stamp duties, rates and land tax, and prevent urban infill from competing with their drip-fed land releases. Rents are a by-product of this agenda.

Incidental Tourist5:31 pm 10 Nov 22

Hah – Sounds like a Christmas gift to landlords? Improving insulation is not a problem. The problem is extra costs to landlords again in already the most expensive rental market. Had the ACT Government played its fair part by giving tax rebate to landlords to compensate costs, the situation would have been different. But as usual Barr/Rattenbury government shifts even more costs to landlords making rents even less affordable.

Peter Bickerton3:31 pm 10 Nov 22

Similar story with Bergmann private school in Gungahlin, expansion of school over a decade and the latest example is currently building a carpark on the previous wells station walking track. They earlier built a childcare centre on their previous carpark after changing the zoning and then complained there was insufficient car parking. Unfortunately the local residents have suffered from a decade of constant negative construction noise, increased traffic etc. I heard the oval was initially to be used for general access too like the Palmerston oval, but now hidden from view and just used by the school.

Government no fault evictions are a no no.

Also the same government. If you don’t get insulation the tenant has to move out.

What this means is dodgy installers installing flammable insulation of substandard.
Insulation in older homes creates a fire risk as older cables aren’t rated to be insulated with the same load.

Hopefully they let the landlords charge more for homes now the tenants save on heating.

If the government had done their job of ensuring homes were built for the climate, this would be unnecessary as they’d all be oriented properly, use good quality building materials, double-glazing and generally be well-insulated during the building process. Yet again, landlords have to pay for the ACT government’s failures. Of course they can pass on the costs to tenants, pushing up rental expenses even further.

Surely you didn’t write those two comments in a row within 6 minutes of each other?

On one hand, you don’t want more regulation on requiring landlords to provide liveable dwellings but on the other you want to blame the government for not putting in more regulations on building standards.

What exactly do you think higher building standards would have done to prices and rents using your exact same argument?

The level of cognitive dissonance shown by property investors knows no bounds.

Exactly. I belonged to a group pushing this way back in late 1970s or 80s, and we sent in submissions for this. However, completed ignored. How come it was obvious to us, but not those in charge who should have been knowledgeable in this area! Think of how much of Canberra that has been built since then that could have benefited. Really sad at the lost opportunity.

devils_advocate8:13 am 10 Nov 22

No cognitive dissonance. It is far cheaper to build a home to any particular energy efficiency standard than to retrofit it. Especially relevant given this is the thin end of a much larger wedge to come.

The lack of practical knowledge about these matters in some parts is truly astounding.

Devils Advocate,
yes it is cheaper to build a home to particular energy efficiency than to retrofit, which is exactly what these additional regulatory controls will ensure over time as stock is turned over and new dwellings come to market.

Psycho seems to want to change history by complaining that previous regulatory controls weren’t tight enough, whilst in the same breath complaining about tighter regulatory controls that will improve conditions into the future.

Cognitive dissonance it is.

devils_advocate12:45 pm 10 Nov 22

@chewy14

Nope. Saying on one hand that the rules should be set up front (and that they should have been tighter to begin with) and on the other hand, that it is wasteful to impose rules retrospectively on existing houses, are two entirely consistent points of view.

And in any case internal logical inconsistency and cognitive dissonance are two different things. Google can assist further.

Devils Advocate,
No they aren’t consistent because housing didn’t start or begin in Canberra 30 years ago, the regulatory framework preceded these houses and continues to evolve over time.

It isn’t a static thing with a start or an end.

devils_advocate1:40 pm 10 Nov 22

It doesn’t matter when housing “started”. The difference is between the building requirements that were in place at any given time when a house was built; versus retrospectively imposing requirements on houses that have already been built.

Building codes can change but they usually apply prospectively. Retrospective legislation in this instance is unfair and wasteful.

Your attempts at obfuscating the issue don’t change that.

It matters because the issue is around the level of regulation and controls involved in the industry. Psycho has promoted a position that more regulation would solve the issues whilst at the same time complaining about the level of regulation applied and that it should be relaxed.

And there is nothing remotely “retrospective” about the new regulation, they only apply prospectively, where to rent out a property you must meet a minimum standard going forward.

Oh dear chewy14, you did miss the point.

Dwellings are built by developers and builders under government regulations and controls to ensure that they’re livable and meet community requirements as livable dwellings.

It is the job of the landlord to maintain the dwellings, not to make up for the failures in construction. Repairs are the responsibility of the landlord, whilst improvements are not usually accepted by the ATO as a claimable expense because they’re not maintenance or repairs.

This is not about legislate or don’t legislate. It’s about people doing their job rather than shoving it onto others who are less powerful.

Developers (used to be called speculators) can easily afford to build sustainably, but they don’t because they don’t have to. No-one is making them. The ACT government supports developers in doing what they want, but then expects individual property owners to pick up the slack.

devils_advocate11:55 pm 12 Nov 22

Lmao.

Property developers have to meet the ever-increasing energy efficiency requirements on new builds, and they do, otherwise they don’t receive their DA or certificate of occupancy.

Yeah right. Yet another dictate to landlords from this autocratic ACT government. As this is made law, the cost of insulation will go through the roof. All those newly built apartments up for rent will need to be insulated, as will all the old houses and units. A bonus for insulation businesses.

Demand and supply will push the costs up and encourage poorly skilled people to work in the area. Rents will need to go up to cover the costs and it’s likely that much of the work will be rushed and low quality, just like all the repairs from the hailstorm which are being patched up again now.

Obviously tenants will need to pay more for a better quality of housing. More landlords will sell. How stupid is this government?

“Rental homes without ceiling insulation or with insulation rated less than R2 will require new insulation to be installed or upgraded to R5.”

It’s a pretty low bar to meet. I don’t think anybody should have to endure a Canberra winter with less than that.

devils_advocate8:51 am 10 Nov 22

@colin5000

“It’s a pretty low bar to meet. I don’t think anybody should have to endure a Canberra winter with less than that.”

If that’s correct, surely they could establish whether the house has insulation at the time they inspect the property, and if not, move on to the next one that meets their needs?

So on the one hand you are criticising the government for not ensuring homes were built for the future climate (presumably through regulation?) and on the other hand you are criticising the autocratic ACT Government for dictating terms to landlords. How contradictory…

Also – your predictions of runaway insulation costs being passed onto renters, landlords having to sell and hail destroying roofs is entertaining, but it is complete nonsense. There is enough competition in the insulation sector to prevent installers from dramatic price hikes, landlords can only increase their rent by a fixed amount each year and any landlord that has to sell based on a small additional cost relative to the value of their asset (i.e. a few grand at most) is probably doing so because they took on too much debt. Cry me a river!

devils_advocate4:54 pm 10 Nov 22

@paulmuster you do realise that this insulation lark is the thin end of a much larger wedge in term of energy efficiency standards in existing rentals right?

Right?

It was historically the job of governments to set and regulate local building standards for the community. Canberra’s climate was always extreme, not just now, so the standards should have been set to accommodate that. Unfortunately local government has failed to ensure construction meets community needs. The ACT government continues to describe itself as environmentally friendly, whilst endorsing buildings that require high levels of energy use. They then expect owners to bear the cost of rectifying the problem. That is just passing the buck.

You will soon see (if you can be objective) how misguided are your beliefs expressed in your second paragraph. I lack the time to clarify the detail of which you seem unaware.

I take it you’ve never been in the market for a rental.

I take it that this will apply to all public housing within the dictated time frame as well as for private investors. Where will the Local Council get the money for that….the generous pockets of the ACT rate payers. Just saying…

SigmaOctantis2:04 pm 09 Nov 22

Awesome, so rents will go up to cover the costs of the insulation then this communist govt will complain that landlords charge too much rent.

devils_advocate12:57 pm 09 Nov 22

It’s fine, I’m sure the ACT “government” has done a detailed cost benefit analysis that shows that a) there will be enough trades and supplies to meet the demand caused b) this will not result in homes being withdrawn from the rental market (for example, to be demolished) and c) landlords will not pass on the cost of these upgrades in the form of higher rents, thereby pricing the bottom end of renters market out altogether

Grateful if anyone could post up the link to the credible analysis which has of course been done

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