INDUSTRY NEWSNationalReal Estate News

Should landlords be incentivised to make rentals energy efficient?

The Australian Housing and Urban Research Institute has released a 75-page report that proposes tax breaks and financial assistance for landlords willing to improve the energy efficiency of their rental properties.

It’s one in a slew of suggestions in the report, ‘Warm, cool and energy affordable housing policy solutions for low-income renters’ which notes that “up to 40 per cent of Australian households who rent their housing may be experiencing energy hardship,” a potentially dangerous situation for elder renters.

“The community, governments and the property sector are looking for guidance on which strategies or approaches can work to improve energy affordability and efficiency of dwellings in the rental sector,” the report notes.

It acknowledges that “while investor landlords were identified by participants as incredibly important actors within this setting, few solutions that relied on their voluntary participation were considered potentially effective or feasible”.

Therefore, they must be incentivised, AHURI concluded.

“This could be done through landlords being able to claim tax rebates or other financial assistance so that appliances, such as old, inefficient hot-water services, could be upgraded to more energy efficient models instead of replaced with ‘like-for-like’,” Dr Lyrian Daniel, one of the paper’s authors explained.

The report lays out a number of suggestions. For example, landlords could be allowed to write-off, within the tax system, the cost of upgrades that improve thermal performance (e.g. replacing conventional hot-water systems with heat pumps, or installing solar panels).

“This would provide a strong incentive for some landlords,” the report stated.

“Currently, landlords can write-off the cost of replacement features in a home (i.e. replaced on a ‘like-for-like’ basis) but not upgrades.

“Alternatively, both the Australian Government and state/territory governments could introduce grant programs to facilitate investment.

“Conceivably, such programs could be linked to investment income or property portfolio size, and accessible on the basis of achieving set minimum building standards.

“Critically, such programs could provide an important stimulus to the Australian economy during recovery from the economic ill effects of COVID-19, while providing long-term benefits to the health of the nation.”

Show More

Nathan Jolly

Nathan Jolly was an in-house journalist with Elite Agent. He worked with the company from July 2020 to December 2020.