Renters slugged with $150 extra in home energy bill costs per year

Tenants spend more on energy bills than homeowners because rental properties are less efficient to heat and cool, a new study has found.

Experts say the government should set minimum standards for rental properties and encourage landlords to invest in making their properties more energy efficient.

Report author and head of the Arndt-Corden Department of Economics at the Crawford School of Public Policy, Australian National University professor Paul Burke, said renters spent about 8 per cent more on electricity than similar owner-occupied households. The research was published in the journal Energy Policy.

“We calculated that as being in the order of $150 a year. The effect is material. It’s just one more additional cost that renters need to bear,” Burke said. “At a time when natural gas prices are high and electricity prices are high this is an issue of high importance.”

With the climate set to get harsher and summers hotter thanks to climate change, Burke said renters were unlikely to reap the benefits of the push into renewables.

“Altogether renters are falling behind in the energy transition and missing out on opportunities of energy efficiency and solar-powered rooftops,” he said.

“Some renters are putting up with cold winters indoors because their properties are not adequately energy efficient.”

He said governments needed to improve energy efficiency for renting households – through regulation, and incentives, which encourage landlords to invest in it – because it was a neglected issue.

“The underlying problem is an economics problem which is if there is more insulation in the roof a renter may not see that and may not be willing to pay higher rent for it and reward the landlord for it,” he said.

“Australia is a country with hot summers and in some areas cold winters. This is an important policy topic for governments around the country as renters face higher bills and more uncomfortable conditions relative to other people.”

PRD chief economist Dr Diaswati Mardiasmo, who researched the benefits of green housing in 2018, said Australia had progressed very little since then.

“Compared to the USA, Canada, New Zealand, and a lot of other countries our government’s push to have energy-efficient homes is lacking…because nothing is legislated,” Mardiasmo said.

She said residential property is the largest asset class in Australia, worth more than $9 trillion, accounting for 57 per cent of all building emissions, and that was only set to rise as more people work from home than ever before.

Mardiasmo said her research found a more energy-efficient home would be more attractive to renters and would re-sell for at least 10 per cent higher price than a home that was not energy efficient.

“Landlords don’t realise that by having those green elements they are attractive to renters but also improve capital gains when they do sell.”

Joel Dignam, the executive director of tenancy group Better Renting, said the current rental crisis prevented tenants from demanding more and allowed landlords to provide the bare minimum.

“Governments need to draw a line and make mandatory minimum requirements so people can pass winter in a rental home without their health being at risk,” he said.

“This intersects with the rental affordability crisis around Australia. There is no market pressure to lift the qualities of their properties.”