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The institute’s CEO has warned that hasty implementation of the government’s energy efficiency mandates could “prompt a drop in supply and leave renters without access to affordable homes”.
With the Victorian government preparing to enact minimum energy efficiency standards for rental properties, the Real Estate Institute of Victoria (REIV) chief executive, Kelly Ryan, has advised that rental providers will require further support to meet the requirements.
In an opinion piece published in the Herald Sun over the weekend, Ryan described the intent to improve energy efficiency in rental properties as “commendable”, but she cautioned that “rolling out these standards too quickly will create significant financial pain for rental providers in a very short period”.
Despite the state government estimating energy efficiency upgrades to cost $5,519, analysis from the Gas Appliance Manufacturers Association of Australia revealed that the “typical upfront cost of switching from gas to electricity in a house would be $16,000 to $21,000”.
“‘Mum and dad’ investors supply homes for over 88 per cent of the rental market. While some will pass these upgrade costs to renters, the expectation of upgrading properties in just over 12 months will likely force the hand of rental providers with dire repercussions for the entire market,” explained Ryan.
In its recent submission to the state government, the REIV put forward several recommendations:
1. Financial assistance for rental providers
The REIV stated that the cost requirements for energy-efficient upgrades must take into account the “already high costs of running and maintaining a property”, especially in light of the recent increases in property taxation and interest rates.
2. Extension of time frame and transition periods
Noting the “significant costs and limited labour availability”, the institute advised that the implementation lead time should be extended to 36 months, and allow for a transitional period which considers the “different needs of different properties”.
3. Clearer details around exemptions
The REIV is also advocating for “clearer details and transparency around exemptions as well as sector education to ensure all parties are clear on their obligations”.
“While there’s no argument that appropriate minimum standards for rental properties are needed, greater consideration must be given to the planned rollout,” said Ryan.
“In an acute housing supply crisis, supporting rental providers with financial incentives and longer time frames as they navigate a challenging market is key to retaining supply of rental properties,” the CEO concluded.
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