Some of Australia’s draughty rental stock is about to get a much-needed retrofit, writes Bonnie Learmonth.
It was the coldest morning recorded this year—still three degrees at 8am. So it seemed appropriate to be sitting in Jonathan Cornford’s draughty back room, discussing insulation and the problems he and his family have had installing it in their rental home.
“Insulation is a big need in terms of rental properties, but it is hard because there is no great incentive for landlords to provide it,” Jonathan explains.
Jonathan had touched on the problem of ‘split incentives’ that confronts all renters. Landlords are not responsible for paying the energy costs of the house and only receive a financial return from rental income, not the energy efficiency of the property. The tenants will use cheaper products which use more energy, because they are unlikely to be in the house long term to receive the benefits after the payback period. The savings and responsibility to act are split between the renter and the landlord, creating inaction.
Overcoming these barriers has been the subject of much discussion at all levels of government. The federal government has started to address the issue by offering $1000 rebates for rental homes that install ceiling insulation [Ed note Oct 2010: this rebate has now been discontinued], or $1600 to replace electric hot water systems with solar hot water.
But even before this federal action, Victorian not-for-profit group Just Change had been actively working to overcome the issue of split incentives. Just Change provides free energy efficiency retrofits for low-income rental homes in metropolitan Melbourne. It was founded in July 2008 by six graduates of the Centre for Sustainability Leadership with backgrounds in law, public health, government, environmental science and industry.
Passionate about the environment and social equity, Just Change identified a gap in available residential energy efficiency programs that saw renters missing out, especially those on lower incomes. “Low-income renters face significant barriers to installing energy efficiency technology. Even with their landlord’s permission, the upfront costs are unaffordable. The continued use of inefficient appliances and the heating and cooling of uninsulated homes creates huge energy bills and financial stress,” says Just Change’s Dougal McInnes.
Reports from the Australian Council of Social Service, Choice and the Australian Conservation Foundation have found that as a proportion of their income, low-income households spend double the amount on energy bills compared to higher income households. Low-income households are also more likely to own second-hand and inefficient appliances, live in the least energy efficient houses and spend a greater amount of time at home consuming electricity. These costs are likely to increase under a future emissions trading scheme that will drive up the price of electricity.
With these studies in mind, Just Change is conducting a pilot study involving a small number of low-income households. The aim is to better understand the barriers to energy efficiency for low-income renters, real estate agents and owners—and to identify the policy measures needed. “The way that Just Change hopes to make a difference,” says McInnes, “is to use the payment of rent as a lever for greater energy efficiency.” In return for free energy efficiency retrofits, landlords agree to keep the rent unchanged for 12 months. This allows renters to receive the immediate financial benefits of their reduced energy use.
Engaging agents
Real estate agents are the key link between owners and tenants. Throughout their pilot study, Just Change is researching the attitudes and behaviours of real estate agents, owners and tenants via interviews and surveys documenting their experiences during the pilot study. In the houses retrofitted to date, time has emerged as a major barrier for real estate agents and owners. As Jonathan Cornford, a tenant of a recent Just Change house, remarked: “the major issue has been the time and effort it has taken going through real estate agents and our landlord.” Having Just Change negotiate consent for installations on the tenant’s behalf is one way of mitigating this burden.
Just Change has received generous support from Sustainability Victoria, the Real Estate Institute of Victoria (REIV) and Simply Energy, while also drawing on state and federal rebates. For more information on Just Change, or to get involved in their projects visit www.justchangeaustralia.org
Read the full article in ReNew 108
This entry was posted on Wednesday, October 13th, 2010 at 9:46 am