Skyrocketing rents combined with a lack of energy efficiency in rental properties across the country have created a double-whammy of financial pressure for Australia’s growing number of renters, a new report has found.
More than half of Australia’s renters don’t have, or are not aware, of energy efficient features in their homes, according to the PropTrack Origin Renter Reality Report released today.
The report – which analysed 4,800 responses to realestate.com.au’s January 2025 Residential Audience Pulse Survey – also revealed 56% of renters felt they had no control over mitigating energy costs in their homes.
Many of them said they would pay more for an energy efficient rental – about a third of the respondents indicating they would pony up extra for “smart features”. However, the report noted most listings did not mention these features, and there were no minimum standards for energy efficiency in most states.
Many renters are already struggling with the growing cost of renting a home – whether it has energy cost-reducing features or not – PropTrack senior economist Anne Flaherty said.
“If you look at rents on their own, they've increased astronomically – nearly $11,000 across the country,” Ms Flaherty said. “Then you add the fact that people are paying more in energy costs.”
Rental affordability is at its worst in almost two decades, the report showed, with the pace of rent increases far outstripping wages growth during the past five years.
In the five years prior to 2020, national rents averaged annual growth of 1.9%. With the advent of the pandemic, demand increased, and rent-growth ballooned to 17% by March 2023.
Though annual rent growth slowed to 5% as of March this year, it remained higher than wages growth, which was 3.4% in the year to March, according to the Australian Bureau of Statistics.
Not enough homes = low expectations
Ms Flaherty said part of the continued affordability constraints for renters was due to the small number of available properties on the market.
“At the moment, rental vacancy rates are very low around the country so I think a lot of renters feel like they just don't have a choice,” Ms Flaherty said.
The report showed 71% of respondents said they would have to compromise on price, location or property features to secure a rental.
It also showed many had an expectation their home would be poorly equipped to provide cost-affective heating and cooling – 38% said they would sacrifice their own comfort to save on energy costs.
“It just goes to show the situation we're in. Australia is world famous for having the most expensive ‘tents’ as houses,” Ms Flaherty said.
“A lot of us grow up in homes that are freezing in winter and very hot in summer and it's just something that we've adapted to.
“There's this expectation that ‘Ok, yes, I am going to be uncomfortable in my own home. I can't afford to pay to be comfortable in the home I live in’ which is really terrible, and I think it's just a legacy of our really poor home-building standards.”
Tenants Victoria director of policy, advocacy and engagement Damien Patterson said this was a common story among renters who were already struggling to keep up with housing and energy costs.
“We also know renters are reluctant to ask for even repairs at the moment, for fear that landlords will raise the rent in response or that they'll have to move out, so it could be really hard to ask for something like energy efficiency upgrades,” Mr Patterson said.
Who foots the bill?
Governments have done little to assist with upgrades, Ms Flaherty said, and though the Victorian government recently introduced minimum energy efficiency standards - set to start in March 2027 - few other states have followed suit.
While noting renters would likely welcome Victoria's new minimum standards – which includes ceiling insulation and efficient heating and cooling – Ms Flaherty said there's a risk in placing the responsibility solely on landlords.
“Increased compliance is one of the contributing factors to many landlords exiting the market. Victoria is actually seeing a massive reduction in the total number of rental properties,” she said, speaking about the state’s increased land tax, introduced in January 2024.
PropTrack senior economist Anne Flaherty said governments have done little to assist with energy efficient upgrades for rental properties. Picture: realestste.com.au
“Even though we do need to improve and maintain the standards for renters, sometimes when you push too hard, it can actually make the situation worse for renters, by reducing the total number of rental properties.
“The key thing here is the government needs to take responsibility for providing the necessary incentives for landlords to upgrade their properties.”
She said many landlords were also struggling with cost-of-living pressures, particularly in a high interest-rate environment.
“A lot of landlords are throwing in the towel and saying ‘actually it's too much work all of this, the growth in rents doesn't offset the increase in other costs I have’,” she said.
“So making it easy for both renters and landlords to make these improvements is going to improve the stock of housing for Australians, and also means that people are going to be comfortable in their own homes – which really should be given.”
Landlords stand to gain from upgrades
The report found many people would be will to pay more for properties with better efficiency, indicating landlords who upgrade could see higher yields.
“If they do make these adaptions to the property, they generate higher rent, and it does also add to the value of the property itself," Ms Flaherty said.
Landlords could add value to their properties and earn more rent by upgrading properties with energy efficient features. Picture: Getty
Mr Patterson said whether funded by the government or landlords, a minimum standard of being able to affordably keep a home at a comfortable temperature was “essential”.
“We want to make sure that this is a system that works for everybody – that said – it is really important that renters live in homes that do meet some sort of a minimum standard, and the ability to keep your property at a temperature that is not too uncomfortable would seem to be a fair minimum standard,” he said.
“Renters are paying pretty significant rent at the moment and it's important that they get a good quality product from that.”
Keeping costs down
The report showed the most popular way renters save energy is to turn lights off when they're not using them, but Origin Retail executive general manager Jon Briskin said there are other ways renters can keep costs down.
“There are many simple, affordable and temporary solutions to boost energy efficiency in rental properties and deliver energy bill savings,” Mr Briskin said.
“This includes draft-proofing, upgrading appliances to energy efficient models, as well as small changes to energy habits.”
Ms Flaherty said renters could gain at least a small amount of control over their energy bills by making these small changes, which also included installing curtains and using window insulation kits.
Renters can make small changes to bring down their energy costs. Picture: Getty
“Renters absolutely have limited control in what they can do, but a lot of renters also indicated [in the survey] that they didn't know where to start,” she said.
“Energy efficient appliances and even small adaptions you can make to your home that actually improve its insulation. Something as simple as a door runner just blocking a draft can actually make a big difference in terms of the efficiency of heating and cooling.”
The bigger picture, however, is building more energy efficient homes in the first place, Ms Flaherty said.
“The cost of building homes has increased dramatically in recent years and all of these improvements and energy adaptions actually add to the cost of building the homes,” she said.
“I think there's an opportunity for government to partner with developers … to make sure that, first of all, we are building enough homes and, second of all, that the homes we're building are really meeting the needs of Australians.”
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