The Victorian government has confirmed it is considering introducing mandatory disclosure of energy performance at point of sale or lease for residential properties, and mandatory standards for the energy performance of rental housing.

A spokeswomen for the Victorian government confirmed to The Fifth Estate it was investigating the measures, which were also discussed at this week’s Victorian energy summit, according to Alternative Technology Association policy and research manager Damien Moyse.

The ATA was among the organisations that attended along with groups in the One Million Homes Alliance such as Environment Victoria, Kildonan Uniting Care, the Brotherhood of St Laurence, Victorian Council for Social Services and the Victorian Tenants Union.

The Alliance was formed seven years ago to advocate for better energy efficiency standards for Victorian residential housing, and for a greater focus on assisting low income households and renters. It has just released its own roadmap for residential energy efficiency.

Damien Moyse

Mr Moyse said the roadmap sets benchmarks for energy efficiency, particularly in the low-income household space.

Currently, the average performance of pre-2005 housing stock is around two NatHERS stars, Mr Moyse said. The roadmap aims to raise that performance to five stars for all dwellings by 2025.

The Alliance estimates roughly one-third of Victorian energy consumers are concession-eligible, which equates to around a million households.

“Energy efficiency is generally about spending money now to save money later, but low income people can’t afford to do that,” he said.

The roadmap looks at what the government could do to help achieve the five star target, including measures such as extending innovative financing products such as Environmental Upgrade Agreements to cover housing energy upgrades, or on-bill financing methods.

“If you get the financing right, the payment [for upgrade costs] would be less than the savings on energy bills,” Mr Moyse said.

The roadmap also discusses how government can work with energy retailers, who Mr Moyse said were unhappy about the number of hardship payment arrangements they have to provide.

If the Victorian retailers were to engage in supporting energy efficiency activities for struggling households, as they do in South Australia under the Residential Energy Efficiency Scheme, it could be a win-win, he said.

“The government in Victoria should support some auditing and retrofit activities for those in need as SA’s government does.”

He said there was also a need for greater public education around energy efficiency, and that the Victorian Energy Efficiency Target, while it discounts the costs of some technologies, should have an element of specific assistance for low income households. A proper energy audit process is also a necessary first step.

Mr Moyse said that hopefully the government was seeing there is consensus around mandatory disclosure and minimum energy standards across the residential sector.

The policy move is particularly important for resolving the split incentive issue for rental properties.

“That’s where we’ve all gotten to. There is no incentive for the landlord to improve energy efficiency, and you can’t create an artificial incentive,” he said.

“The only way to increase standards is to stick in standards. And the first step towards that is mandatory disclosure.”

He said the government should start with a low benchmark and then “slowly ratchet it up”.

Concerns over compliance

Another area of concern is around lack of compliance of new build homes with the existing mandatory six star standard.

Mr Moyse said the regulations were “not working” as there was no auditing, and no compliance framework. That means consumers are not getting what they are actually paying for when buying a new home.

The possibility of minimum performance standards and mandatory disclosure was also welcomed by CRC for Low Carbon Living researcher and Swinburne University professor Terry Burke.

“I would like to see us work towards having that conversation,” he said. “It puts the industry on notice.”

He said that new CRCLCL research he completed with Swinburne’s Liss Ralston released this week showed that energy hardship and energy poverty were strongly associated with households on low incomes in the private rental sector.

The research also showed that 57 per cent of people in extreme energy hardship – unable to pay their bills – also had major housing affordability problems.

Mr Burke said the findings suggest that housing has greater dimensions in terms of affordability hardship than simply the cost of paying the mortgage or rent.

One of the reasons renters are particularly vulnerable, he said, was that they were unable to adapt the house to mitigate the impact of rising energy costs.

“They can’t add solar panels, and they may be stuck with inefficient appliances that came with the house,” he said.

There needed to be some form of incentives for landlords to upgrade the efficiency of properties, he said. Energy efficiency was, however, a long term investment that most landlords wouldn’t do for a short-term lease tenant.

And in Victoria, like the rest of the country, the vast majority of leases are short-term. Mr Burke said longer term leases were part of the solution, so tenants could recoup costs of any upgrades they undertook.

Mr Burke contrasted the Australian situation to Sweden, where long-term leases mean households undertake upgrade activities as they can be confident they will gain the financial benefit.

Better rental energy performance information needed

Another concern regarding the rental sector was the need for better information about the energy performance of homes, to assist with improved decision making. Also, that landlords needed to understand that energy efficiency added to the capital value of their property – and that was something property valuers also need to get a handle on.

Mr Burke also believes we need a “much larger social housing sector”, as this sector has a track record on improving the energy efficiency of properties due to having a long-term vested interest both as property owners and as landlords, as lower energy bills improved tenant ability to pay rent.

He said it was a “no brainer” that there were broader social benefits if the energy performance of housing stock was improved, namely lowering the national emissions footprint.

“It is not just about lowering the cost for individual households, it is also about moving towards a low carbon society and low carbon cities,” he said.

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  1. I hope they don’t try to reinvent the wheel. Just adopt the ACT system as even the ABS has done studies on the ACT scenario which might be deemed applicable to Victoria if the scheme is similar. Hopefully someone gets on the back of the NSW government.

  2. To the comment above, you would not want mandatory disclosure to spread across Australia, because the wrong insulations will continue to be used in hot climates.
    Mandatory disclosure of building energy performance is going to compound the problem, because of the existing known chaos in the unreliability of the House Energy Ratings, which are underpinned by misleading insulation standards.

    See quotes from Pitt & Sherry NEEBP report 2014.
    Page 200
    Townsville Workshop
    “Perhaps one of the most consistent items of discussion was around the lack of applicability of the BCA to workable and comfortable tropical buildings. The important role of the local strategy of reflection of heat through radiant insulation, backed up by air movement to provide evaporative heat loss, is at odds with the focus on sealed and bulk insulated buildings in the code driven designs. Sealed and bulk insulated buildings are seen as simply not workable in the tropical climate. This different response to a different climate creates anomalies like a tendency to install multiple radiant heat barriers in roofs, but no bulk insulation above the ceiling and, in some areas, installation of combination insulation (foil backed thermal blanket) upside down to ensure trapped condensation does not cause corrosion (a problem which simply does not occur in cooler and less humid climates). A building with two layers of reflective sarking in a ventilated roof cavity and no bulk insulation above the ceiling does not rate highly in many assessment tools or schemes but works well in the tropics”.

    Page 230
    Knowledge of energy efficient building materials
    “Some designers reported some material suppliers as “pushing ‘climate wrong’ products” due to their lack of understanding and desire to make a sale. Some respondents were also concerned that inappropriate use of materials was counterproductive and damaging to the broader reputation of energy efficient materials and policy aims in this area”.

    Further confirmation of the HERS chaos can be found from the extensive technical recommendations 6-11, 2010 Senate Inquiry – Home Insulation Program,
    Advises for changes to Standards Australia, Energy Efficiency Provisions in Building Code of Australia and call for research to identify different insulations for different climates.

    Few members of public appear interested to react to this 2010 Inquiry. You can’t keep trying to breathe life into saving HERS, when intractable problems must be confronted. Standards underpin the HERS schemes which are called up in regulations, and the Standards are not telling the truth. No there is no “real time” independent thermal testing of houses in Australia, and major changes are needed. Organisations such as CSIRO owned by the government, are not independent and cannot be trusted anymore. Industry write Standards, referencing steady state laboratory low temperature testing which is utterly wrong for hot and humid climates, and the public interest is abused.

    Another shocking fact is the false summer R-values of roof space cooling ductwork wrapped in bulk insulation, which rapidly gets overheated by intense radiation of 50-70deg. The key insulation standard permits this falsehood and it is a total disgrace.

    This is why I dead against mandatory disclosure regulations. Products must demonstrate proven performance, and not be hidden within broken rating scheme shams.

  3. The idea of mandatory disclosure of rental properties means that a high star rated home will not only have increased resale value but also have greater tennant attraction as running costs will be lower (even in short term leases which are generally at least 2 quarters)

  4. I’m surprised Newscorp hasn’t started the same rubbish scare campaign like they did a few years ago… “Gov’t hatching a plan to wipe thousands off the value of your home”
    Rather than:
    “Buyer beware, do you know what that house will cost you?”
    “Invest in insulation and windows and reap the rewards when you sell.”

  5. The article seems to imply that its the renters who are short term rather than short term leases being the norm for agents and investors purposes. Long term leases would offer stability for renters but the real issue is investors wanting short term gains with little regard for the impacts on renters. When you look at what is driving The short term lease arrangements it is not tenants.