Page 163 - Week 01 - Wednesday, 15 February 2012
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As I mentioned last year when the exposure draft of this bill was first released, this bill is a blunt instrument. It imposes significant costs throughout the ACT private rental market that have the potential to seriously and adversely impact on tenants by pushing up the cost of renting in the ACT. Firstly, this bill imposes a direct cost on all lessors. Under the proposed changes, lessors would need to advertise a current EER report whenever the property is advertised for rent. Given that the penalties that apply for not advertising an EER or for advertising an EER that is false or misleading and given that a range of factors can impact on the EER of a property, many lessors are likely to obtain, at cost, a new report whenever the property is re-let. This cost, typically around $150 for a unit or $300 for a larger house, is likely to be recovered through an increase in rents.
More importantly, however, the bill imposes a direct cost on lessors who need to improve their properties to meet the proposed new energy efficiency requirement of three or more stars by 1 January 2016. Some homes that do not meet this required level may be able to do so through modest renovation, such as through installation of ceiling insulation and weather sealing. Homes that are energy inefficient and have a poor aspect will almost certainly require much more substantial renovations, such as replacing existing windows with double glazing, installing ceiling and wall insulation, removing trees that shade the property in winter and, for units, adding a second skin.
There is no data available about the energy efficiency of rental properties in the ACT. So there is no evidence base to firmly and accurately estimate the cost to the ACT of this proposed scheme. However, it is estimated that one-third of Housing ACT’s stock would require the more substantial renovations I have just mentioned, while a larger proportion would require the more modest renovations, to meet the proposed new energy efficiency standards. It is possible, and using Housing ACT stock as a guide, that this could be representative of the state of rental properties throughout the ACT more generally.
Therefore it is likely that lessors will seek to recover this cost burden from tenants in the form of increased rents. To illustrate this, if a rental home with a poor aspect requires a capital investment of $10,000 to meet the proposed minimum of three stars, a rental increase of $190 per week would be needed to recover the cost of the improvements within one year or an increase of $65 per week to recover the cost over three years.
In addition, if the tenant is on a periodic lease, it is likely that the lessor will need to serve a 12-week notice to vacate on the tenant, to be able to carry out the more substantial renovations. That is right. This bill could result in people being evicted from their premises, having to vacate their premises, because of the requirement to upgrade to meet the new energy efficiency standards. Of course, after that the lessor would then be able to lawfully increase the rent, as I have described.
Mr Rattenbury, in presenting this bill, mentioned that a household energy bill can be halved by increasing the EER from zero to three stars. Although improving the star rating of a property could be expected to decrease the energy needed for heating and cooling, energy use is affected by many other factors. And these include personal
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