Victoria's hot water rules for renters and landlords

Victoria's rental minimum standards are getting an energy efficiency upgrade, and hot water is one of the first parts to start. The rental version of the rule is stricter than the one for owner-occupiers, because it sets a minimum efficiency for the replacement. Here is what Consumer Affairs Victoria (CAV) and the Victorian Government say.

What is the hot water standard for rentals?

CAV puts it plainly: "From 1 March 2027, when an existing hot water system permanently fails and can't be repaired, rental providers must replace it with an energy-efficient electric hot water system." The system must be either "an efficient heat pump water heater OR an electric-boosted solar water heater" (CAV minimum energy efficiency standards).

The legal definition is tighter still. An "energy efficient water heater" is a heat pump or electric-boosted solar unit that meets either a minimum energy saving or a minimum number of small-scale technology certificates, set in tables in the Plumbing Code of Australia. CAV suggests checking the VEU Product Register to find a system that meets it (CAV hot water standard, VEU product register).

How is this different from the rule for owner-occupiers?

The big one is the middle row for rentals: a failed electric storage tank in a rental can't simply be swapped for another electric storage tank from 1 March 2027 (CAV). Sources for the owner-occupier column are on the 2027 rule overview.

Does a landlord have to replace a working system?

No. CAV says: "You do not need to replace a hot water system that is in good working order. This standard applies only when your existing system breaks down beyond repair."

What exemptions apply to rentals?

CAV lists exemptions to the hot water standard, including:

• Much higher than average installation cost. If the switchboard needs an upgrade to take the extra load, that cost counts as part of the installation cost.
• Replacement under warranty. If the current system fails while under a manufacturer, supplier or installer warranty, it can be replaced with an identical system.
• Owners corporation rules that prevent the installation.
• A centralised system serving the building.
• A temporary water heater installed for no more than 60 days.
• Network augmentation needed to supply the system, and heritage permit refusal.

The exact wording and conditions are on the CAV exemptions page. CAV also says it will "continue to provide more information about compliance requirements over the coming months", so check that page before relying on an exemption.

Who pays for the new system?

The rental provider. Under the Residential Tenancies Act 1997, the rental provider is responsible for making sure the property meets the minimum standards. The government's 2025 factsheet for rental providers notes that letting a new renter move into a property that does not meet minimum standards is a criminal offence, with maximum penalties it gave at the time as over $11,800 for individuals and over $59,000 for companies (DEECA rental factsheet). Penalty amounts are indexed, so check the current figures with CAV.

What help is there for landlords?

• VEU discount: the government says rental providers can claim a discount of up to $560 when replacing a gas hot water heater with a heat pump (energy.vic.gov.au). The electric to heat pump discount is up to $630. Private rentals are eligible under VEU.
• Federal STCs apply to rentals the same as any other home. See how STCs work.
• Solar Homes hot water rebate: this is for owner-occupiers. Solar Victoria has temporarily opened hot water rebates to rental providers only for properties affected by Solstice Energy's closure of its compressed natural gas network (Solar Victoria rentals). Its general landlord rebate stream covers solar panels, not hot water.

What does a renter gain?

The government's rental factsheet estimates benefits for renters of up to $220 a year from efficient electric hot water. That is the government's estimate, not a guarantee, and depends on how much hot water the household uses and its electricity plan.

What should renters do when the hot water fails?

1. Tell your rental provider or agent straight away, in writing as well as by phone.
2. Keep a record of when it failed and what you were told. CAV's pages on repairs explain the process if the rental provider does not act.
3. From 1 March 2027, if the system can't be repaired, you can expect the replacement to be a heat pump or electric-boosted solar system unless an exemption applies.

What should landlords do now?

• Find out the age and type of the hot water system in each property.
• Ask a plumber whether a heat pump would fit in the current spot and whether the switchboard can take it. That tells you early whether an exemption might apply.
• Line up a VEU accredited provider before a failure, so a replacement can go in quickly with the discount applied.
• Read the noise guide before choosing a spot. The regulator recommends keeping heat pumps away from bedrooms, which matters more in apartments and townhouses.