New homes must now hit a 7-star energy rating in most states, and minimum efficiency standards for rentals are close behind. For investors, it reshapes build budgets and landlord obligations.
If you are building, buying new, or holding a rental, Australia's energy rules have moved under your feet. New homes in most states must now be designed to a higher energy standard than the stock built even three years ago, and separate rules are coming that will set a minimum standard for rental properties. Both change the numbers for investors.
What changed for new builds
The centrepiece is the National Construction Code 2022, which lifted the minimum energy rating for new homes from 6 stars to 7 stars on the Nationwide House Energy Rating Scheme (NatHERS), and added a separate "Whole of Home" energy budget covering fixed appliances like heating, cooling and hot water. The code took effect from 1 May 2023, with the energy measures becoming mandatory later that year, and states adopted it on their own timetables: Victoria made 7 stars mandatory from 1 May 2024 and Western Australia from 1 May 2025. By mid-2026 the standard applied, with variations, across most of the country. These are regulatory dates that differ by state and are still being phased, so confirm the rule that applies to a specific project against the current state building authority before you rely on it.
For a builder or developer, 7 stars generally means better glazing, more insulation, improved sealing and smarter orientation, which adds to the build cost. The trade-off is a home that is cheaper to run and one that sells for more. Domain's research puts the premium for energy-efficient homes at up to 14.5 per cent nationally, about $118,000 on a typical sale. For a buyer of new stock, it means the home you purchase in 2026 should cost less to heat and cool than an equivalent built under the old 6-star rule.
The rules coming for landlords
The second shift lands on landlords. Several states are introducing minimum energy efficiency standards for rental homes. In Victoria, new standards are being phased in from 1 March 2027, covering ceiling insulation, draught-proofing, and efficient electric heating, hot water and, by 2030, cooling, replaced as older systems reach the end of their life. In the ACT, most rental properties are expected to need to meet a minimum ceiling-insulation standard from 30 November 2026, with landlords required to disclose compliance in rental advertisements. These are legislated obligations that vary by state and carry compliance consequences, so any investor decision should be checked against the current official state source or with a property lawyer, not taken from a summary.
What it means for your numbers
The investor takeaways are practical. New stock is now built to a higher, more marketable standard, which supports both rent and resale. Older rentals in states with minimum standards will face retrofit costs and, in some cases, disclosure obligations, so factor that into holding costs and due diligence on any purchase. And the direction of travel is one way: efficiency is becoming a floor set by regulation, not an optional extra.
The renter penalty
Australian renters spend around 8 per cent more than similar households on energy, according to work co-authored at the ANU. The main driver is information, not just insulation: the market cannot see how efficient a rental is, so inefficient homes are not discounted to match, and the tenant wears the higher running cost. Minimum standards and disclosure rules are designed to close that gap, and they move the cost of doing so onto the owner.
