Calls for landlords to face mandatory solar installation for tenants as energy divide widens

May 02, 2023

Rental advocates are calling for mandates requiring landlords to install solar panels on their tenants' properties amid warnings renters are missing out on the benefits of the switch to renewable energy.

With benchmark power prices set to rise by more than 20 per cent from July, concerns are growing over how the increases will affect poorer and disadvantaged households, many of which are renters.

Lobby group Better Renting said the latest price hikes risked further entrenching an "energy divide" that was cleaving a gap between customers able to access green tech such as solar panels and those who were unable to follow suit.

More than three million Australian households now have rooftop solar panels, while the number with batteries and energy efficient systems such as heat pumps is also on the rise.

Joel Dignam, the executive director of Better Renting, said the runaway take-up of such technologies had been a boon for many consumers, allowing them to lower their bills and reduce their reliance on the grid.

But Mr Dignam said renters were largely excluded from this trend, suggesting that fewer than one in 50 had solar panels on their roofs.

"If you're a renter, your chances of getting solar … you've really won the lottery if you do," Mr Dignam said.

"Probably slightly higher than those odds, but it's really rare."

According to Mr Dignam, renters were disproportionately affected by rising power prices, which hit people with lower incomes harder.

He said this was because energy costs typically chewed up a bigger share of a poorer householder's pay packet – a situation made worse by super-sized tariff increases.

On top of this, Mr Dignam said vulnerable customers often used more power than their wealthier counterparts, citing research that showed renters paid about 8 per cent more for their energy on average than owner-occupiers.

To cap it off, he warned the sky-high price of housing in Australia risked cementing the disparities, saying growing numbers of people were becoming stuck in the rental cycle.

"The problem is becoming more striking because you have more people renting and renting longer, but also really big increases to energy costs, particularly in the last couple of years," he said.

"So, maybe this disparity that was already there becomes a lot more pronounced.

"And I think maybe renters who figured they'd eventually get to own a place and could put solar on it are now realising that might be out of reach."

In the Federal Budget last month, the Albanese Government set aside $1 billion in concessional loans to help lower-income households install energy efficiency measures such as solar panels.

Mr Dignam said such carrots were welcome and could help bridge the energy gap between owner-occupiers and renters.

However, he said incentives would not be enough alone to fix the problem, arguing governments may also need to consider forcing change.

He said landlords should be required to install solar panels on tenants' properties where possible.

"Solar could absolutely be included in a performance standard, and it could be made a requirement for a rental property where if it can have solar it has to have solar," he said.

"And the benefits of that are accruing to someone other than the landlord but the economics of it really stack up.

"You could also look at other schemes that try to incentivise it.

"But without something in addition to the incentive, you do tend to see pretty low uptake, unfortunately."

The call drew a frosty reception from landlord groups.

Hayden Groves, the president of the Real Estate Institute of Australia, warned against devising "poor ideas" that would ultimately be counterproductive.

Mr Groves agreed that putting solar and green tech on more rental properties would be welcome, noting that some were already doing this.

But he cautioned against mandatory measures, arguing they would push up prices and hurt renters.

"What inevitably happens is you end up with less supply and rents rise as a result," Mr Groves said.

"We encourage landlords who can afford it to make the houses they lease out to their tenants more energy efficient, which includes solar panels.

"But any sort of minimum standard required where a landlord has to install, you will just see a mass exit of investment from the residential sector.

"There's a balance to these things, but certainly making minimum standards mandatory is a poor idea simply because it impacts negatively on supply and you end up with higher rents.

"So, the very people that the tenancy advocates are looking to protect end up being disadvantaged."

For Jayden Pan, who rents a duplex in the Sydney suburb of Burwood, solar panels were an elusive goal.

The 28-year-old said he would "love" to have a system on the house he shares with a flatmate, saying it would help lower the rising cost of energy and give him the confidence to turn on the heater more often.

But he's all but discounted his chances.

"We do our best to try to keep a very minimal energy footprint to try to keep the cost down, in the meantime foregoing certain luxuries," Mr Pan said.

"I've kind of accepted that it's not going to be an option for me.

"Again, I'm in a rental, so it's a big ask for me to go and ask my landlord to put rooftop solar on this place.

"He can very easily just say no.

"And I understand why he would say that … because it's a big cost for him and it's another thing he doesn't have to worry about."

Like many people in his generation, Mr Pan worried that home ownership would remain out of reach given eye-watering house prices in places such as Sydney and Melbourne.

As a result, he would continue to be fully exposed to the retail price of electricity.

"I'm an environmental scientist and I would love to be able to limit my footprint on the planet as much as possible," he said.

"And it's quite simply not an option because of factors completely outside of my control."