Push to reward landlords for providing energy-efficient rental homes

author-avatar By on September 23, 2020
Push to reward landlords for providing energy-efficient rental homes

Photo by Diego PH on Unsplash

In a new push from a housing research institute, landlords could be incentivised to make their investment homes more energy efficient.

The Australian Housing and Urban Research Institute (AHURI) today released a research paper proposing the efficacy of landlords providing energy-efficient rental homes for their tenants.

The research paper, Warm, cool and energy affordable housing policy solutions for low-income renters, examined surveys of low-income renters and found "numerous housing quality issues" affecting such households.

According to the paper, 18% of public renters and 14% of private renters were unable to keep sufficiently warm in winter.

The University of Adelaide's Dr Lyrian Daniel - one of the authors of the paper - suggested incentivising landlords to improve their property's energy efficiency as one strategy. 

"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 Daniel said.

Buying an investment property or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for investors.

Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) investment home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.

Dr Daniel also said minimum standards of energy efficiency were needed.

"One of the big problems is that there is no agreed definition of how the community measures energy hardship," she said.

"It is critical that we’re able to capture and then monitor the different factors that lead people into energy hardship overtime so that effective policy responses that catch people before they experience deep and long-term disadvantage can be developed."

AHURI's research cited a 2010 Victorian Council of Social Service (VCOSS) survey that found swapping out an electric water heater for a 2-star gas one in colder climates could save renters $300 a year.

In addition to energy-efficient appliances and lightbulbs, AHURI also proposed incentives for landlords to install solar panels, and 2018 research from Colmar Brunton found 2% of renters have access to solar, compared to 20% of all households.

Improving thermal quality for homes in cooler climates, and improving ventilation and shading areas for homes in warmer climates, was also on the agenda.

The research comes after a joint proposal backed by more than 50 organisations promoted a national energy productivity program.

The Australian Council of Social Service's (ACOSS) climate and energy advisor Kellie Caught said climate change affects low-income households the most.

"As we grapple with the current economic crisis, the federal government should be prioritising investment in technologies and measures, like energy efficiency, solar, batteries, that will create thousands of jobs, reduce power prices, tackle climate change and support people though the transition," Ms Caught said

“We hope to see a portion of the estimated $18 billion investment towards large scale funding for a major rollout of energy productivity measures for low-income homes."

Mandates not the solution

The Real Estate Institute of Australia (REIA) does not support a mandate and instead supports individual homeowners and landlords making improvements.

"We have not supported mandated measures whether it’s for updating existing buildings or mandated energy ratings for properties to be bought or sold as it impacts on affordability – both in the rental and buying spheres," REIA president Adrian Kelly told Savings.com.au.

“A survey around five years ago, that was run by the Australian Bureau of Statistics, found that buyers were more concerned about getting into an affordable house even though it lacked energy efficient features. These were seen as improvements to make later. “

Mr Kelly also said there was a trade-off between short term costs and long term benefits, and who wears the costs of either of them.

“The same applies to the AHURI proposal. If the incentives are such that the cost - including subsidy or tax benefit - is less than the present day value of the value of the future benefits (rental returns and dwelling value) to the landlord, the landlord will undertake the improvements," he said.


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2019. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

Latest Articles

author-avatar
Harrison joined Savings in 2020. He is a journalist with more than four years of experience, with previous stints at News Corp and financial comparison site Canstar. With a keen interest in personal finance, Harrison is passionate about helping consumers make more informed financial decisions.

Collections:

Get free insights & tips monthly

By subscribing you agree to the Savings Privacy Policy

Loading data please wait...

{{returnData.productName}}

Overview

Current Rate

{{returnData.currentRate | percentage:2}}

Comparison Rate*

{{returnData.comparisonRate | percentage:2}}

Rate Type

{{returnData.rateType}}

Advertised Rate

{{returnData.advertisedInterestRate}}

Comparison Rate*

{{returnData.comparisonRate}}

Monthly Repayment

{{returnData.monthlyRepayment}}

Interest Type

{{returnData.interestType}}

Total Interest Rate

{{returnData.totalInterestRate | percentage:2}}

Base Interest Rate

{{returnData.baseInterestRate | percentage:2}}

Bonus Interest Rate

{{returnData.bonusInterestRate | percentage:2}}

Total Interest Rate

{{returnData.totalInterestRate | percentage:2}}

Introductory Rate

{{returnData.introductoryRate | percentage:2}}

Introductory Term

{{returnData.introductoryTerm}}

Base Interest Rate

{{returnData.baseInterestRate | percentage:2}}

Term

{{returnData.term}}

Advertised Interest Rate

{{returnData.advertisedInterestRate | percentage:2}}

Interest Frequency

{{returnData.interestFrequency}}


Fees and Features

Ongoing Annualised Fee

{{returnData.annualFee}}

Upfront Fee

{{returnData.upfrontFee}}

Offset Account

Redraw

Principal & Interest

Interest Only

N/A{{returnData.interestOnly}}

Max loan to value ratio (LVR)

{{returnData.maxLVR | percentage:0}}

Lump sum repayments

N/A

Additional repayments

Maximum Loan Term

{{returnData.maximumLoanTerm}}

Upfront Fee

${{returnData.upfrontFee}}

Ongoing Monthly Fee

{{returnData.ongoingFees}}

Early Repayment Fee Applies

N/A

Vehicle Types

{{returnData.vehicleType}}

Maximum Vehicle Age

{{returnData.maximumVehicleAge}}

Pre Approval Available

N/A

Online Application

N/A

Account Keeping Fee

{{returnData.accountKeepingFee}}

Minimum Monthly Deposit

{{returnData.minMonthlyDeposit}}

Linked Account Required

N/A

Interest Calculated

{{returnData.interestCalculated}}

Interest Paid

{{returnData.interestPaid}}

Online Application

N/A

ATM

N/A

EFTPOS

N/A

Account Keeping Fee

{{returnData.accountKeepingFee}}

Minimum Monthly Deposit

{{returnData.minMonthlyDeposit}}

Linked Account Required

N/A

Interest Calculated

{{returnData.interestCalculated}}

Interest Paid

{{returnData.interestPaid}}

Online Application

N/A

ATM

N/A

EFTPOS

N/A

Minimum Deposit

{{returnData.minDeposit | currency : '$' : 0}}

Upfront Fees

{{returnData.upfrontFee | currency : '$' : 0}}

Annual Fees

{{returnData.annualFee | currency : '$' : 0}}

Notice Period to Withdraw

{{returnData.noticePeriodToWithdraw}}

Online Application

N/A

Automatic Rollover

N/A

Maturity Alert

N/A