Renting Out Property in Victoria – Understanding Minimum Standards and the 2025 Changes
/As part of ongoing efforts to improve the quality, safety and energy efficiency of Victoria’s rental housing, the Residential Tenancies Regulations 2021 introduced significant minimum standards for rental properties. These standards apply to all new residential rental agreements entered into on or after 29 March 2021, and to ongoing periodic tenancies that became periodic from that date onwards.
However, recent changes proposed by the Victorian Government—expected to take effect from 30 October 2025—will impose further mandatory upgrades, particularly concerning energy efficiency and climate control.
In this article, we explain the current legal requirements, outline the proposed 2025 updates, and warn clients that some properties currently on the market do not meet, and may never be able to meet, these standards due to inherent limitations such as building design, construction era, or Owners Corporation restrictions.
This is a critical consideration when purchasing investment properties in Victoria for rental purposes.
Current Minimum Standards (as at 2021)
The Residential Tenancies Regulations 2021 (Vic) set out a broad range of minimum standards under Schedule 4, which a rental property must meet at the commencement of a tenancy. These standards include, but are not limited to:
A functioning toilet and bathroom facilities including a washbasin and a shower or bath connected to hot and cold water.
Electrical safety, requiring a modern switchboard with circuit breakers and safety switches (also known as Residual Current Devices or RCDs).
A fixed heater in the main living area that is in good working order and capable of heating the space.
Lockable external doors and windows that can be secured.
Window coverings in bedrooms and living areas that provide privacy.
The property must be weatherproof, structurally sound, and free from mould or damp caused by the building structure.
Vermin-proof rubbish bins, adequate lighting, ventilation, and functioning kitchen facilities including a stovetop.
These requirements are enforceable under the Residential Tenancies Act 1997 (Vic), and rental providers who fail to comply may face penalties or be ordered by the Victorian Civil and Administrative Tribunal (VCAT) to complete urgent repairs or pay compensation to renters.
Upcoming Changes – Energy Efficiency Standards (from 30 October 2025)
In response to the growing concerns around energy affordability and climate adaptation, the Victorian Government has proposed the following mandatory additions to the rental minimum standards regime, set to come into effect from 30 October 2025:
Ceiling insulation must be installed in rental properties where no insulation currently exists. The type and R-value will be prescribed in the final regulation.
Draught-sealing of external doors to reduce heating and cooling costs.
Outdated gas and electric appliances (such as hot water systems and space heaters) must be replaced with energy-efficient electric models when they reach end-of-life.
A cooling system capable of achieving a minimum 3-star energy efficiency rating must be installed in the main living area.
Water efficiency upgrades, including installation of 4-star showerheads in all bathrooms.
Blind cord anchors must be installed to prevent hazards to children.
These measures are intended to align Victoria’s rental stock with contemporary health, safety and climate-resilient housing expectations.
A Word of Caution – Not All Properties Will Comply
Based on our experience handling property transactions across metropolitan and regional Victoria, we wish to formally warn prospective investors that not all properties currently being marketed as “ideal rentals” will in fact meet either the current minimum standards or the 2025 requirements.
In particular, we have recently encountered listings with the following compliance limitations:
Older apartment buildings, particularly those constructed prior to the 1990s, may lack modern insulation, fail to accommodate required switchboard upgrades, and have limited capacity to install energy-efficient heaters and air-conditioning.
Properties governed by restrictive Owners Corporation rules may prohibit installation of external systems, such as condenser units for split-system air conditioners or rooftop insulation.
Units within heritage or high-density strata buildings often cannot accommodate the internal structural changes required to meet bathroom, ventilation, or safety standards.
Properties located in elevated or low-access areas, such as third-floor walk-ups without roof space, may be physically unsuitable for ceiling insulation or ducted systems.
Some homes in rural or coastal areas have off-grid or partial-grid services, limiting the feasibility of electric appliance upgrades.
We emphasise that these issues can significantly affect the rental potential of the property, both legally and financially. Investors purchasing with the expectation of rental income may find themselves in breach of tenancy laws or burdened with significant capital upgrade costs shortly after settlement.
What You Should Do Before Purchasing an Investment Property
We strongly recommend that all purchasers intending to lease out residential property in Victoria:
Engage us to conduct a thorough pre-contract review, with specific focus on compliance with minimum standards.
Request a building inspection from a qualified contractor with knowledge of rental compliance—not just structural integrity.
Check the Owners Corporation rules and limitations, particularly regarding installations, renovations, and noise or equipment rules.
Factor in the cost of future upgrades, especially where the property has gas appliances, no insulation, or lacks adequate heating/cooling.
Be cautious of vendor or agent claims that a property is “rent-ready.” Unless documented evidence is provided, such claims may not align with legal obligations.
We also encourage clients to speak with a property manager familiar with compliance enforcement under the Residential Tenancies Act. Many agencies are now refusing to manage non-compliant properties, which could leave owners unable to legally lease the property at all.
In Summary
Buying an investment property comes with more than just financial obligations – it brings with it a regulatory duty to provide safe, compliant, and energy-efficient housing.
Failure to meet the minimum standards, whether current or pending, may expose you to financial penalties, tenant compensation claims, or long vacancy periods due to legal non-compliance.
If you are considering the purchase of a property to lease in Victoria, we strongly advise contacting our office first for a contract and compliance review. Let us help ensure that your investment is sound—not just on paper, but also in law.