Victorian government considering mandatory standards and disclosure for resi

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.

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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.

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.