Victoria's gas ban: what Melbourne South East homeowners need to do before March 2027
From 1 March 2027, if your gas hot water system breaks and cannot be repaired, or you replace it for any other reason, the new one must be an electric system, and in a rental home an efficient one. The most practical option for most Melbourne homes is a heat pump. Here's what the rule means for homes in Cheltenham, Bayside, and the surrounding suburbs, and what to do about it.
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Key Takeaways
- From 1 March 2027: in existing Victorian homes, a gas hot water system that fails beyond repair, or is replaced for any other reason, must be replaced with an electric system (usually a heat pump), gas pool heaters included
- Gas cooking and space heating: owner-occupiers are NOT required to switch under current rules
- LPG (bottled or piped): outside the rule, like-for-like replacement still permitted
- Rebate stack available now: around $2,055 off an iStore 270L heat pump hot water system, once Solar Victoria’s 50%-of-remaining rule is applied to the STC and VEU discounts
- Solar Victoria income threshold dropped to $150,000/year from 1 July 2026, households above that can still access the VEU discount ($560 replacing gas) and STCs ($500–$700)
The timeline: key dates for Victorian households
| Date | What changes |
|---|---|
| 1 January 2024 | New residential builds requiring a planning permit cannot connect to reticulated gas |
| 1 January 2027 | New homes and most new commercial buildings cannot connect to reticulated gas (Class 8 process buildings excluded) |
| 1 March 2027 | Existing homes: a gas hot water system that fails or is replaced must be replaced with an electric system |
| 1 March 2027 | Rental properties: a hot water system or fixed heater, gas or electric, that fails beyond repair must be replaced with an efficient electric one |
The rule does not force anyone to rip out a working system. It triggers only when your existing system fails beyond repair. But if your gas hot water is eight or more years old, the failure window is close.
What "end-of-life" actually means
The ban is not retroactive and it is not forced. It applies when your system is replaced, which for most homes means when it fails.
While your system is running: you can keep it, service it, and repair it. None of that changes after 1 March 2027. Most replacements happen when the system is no longer repairable, either because of a catastrophic failure, a safety fault that cannot be economically remedied, or a component that is no longer available.
Gas hot water systems last eight to 12 years on average. If yours was installed in 2018 or earlier, start planning now.
Can you still repair your gas hot water system after March 2027?
Yes. Repairs to existing gas systems remain permitted. The ban applies when the system is replaced: at end-of-life, or earlier if you choose to replace a working unit.
What's affected, and what isn't
This is where most homeowners get confused. The rules differ significantly depending on your appliance type and whether you're an owner-occupier or a landlord.
| Appliance | Owner-occupier rule | Rental rule (from 1 March 2027) |
|---|---|---|
| Gas hot water system | When it fails or is replaced, the new one must be electric | Must replace with efficient electric at end-of-life |
| Gas heater / ducted gas heating | No requirement, can keep indefinitely | Must replace with efficient electric at end-of-life |
| Gas cooktop | No requirement, can keep indefinitely | No requirement |
| LPG (bottled or piped) | Like-for-like replacement permitted | Like-for-like replacement permitted |
Owner-occupiers in Cheltenham and across Melbourne South East do not have to touch their gas cooktop or gas ducted heater. The 1 March 2027 rule is specifically about hot water. Landlords face a stricter standard: both gas hot water and gas space heaters must transition to electric alternatives at end-of-life.
Building a new home from 1 January 2027
The rules also reach new buildings. From 1 January 2027, a building surveyor cannot issue a building permit where the building work involves a new reticulated gas connection. A permit issued before that date is not caught, and neither is a later one where the building surveyor certifies in writing that substantial progress was made on the design before 1 January 2027. That covers new homes and most other building classes; Class 8 factory and industrial buildings are excluded. Renovating or extending a home that already has gas is not caught, but adding a new gas connection to a home that has none is, and so is a second dwelling on the same lot that would need one. LPG appliances remain permitted. If you are knocking down and rebuilding, plan the switchboard for an all-electric house from the start.
Exemptions, who might not have to switch
The rule, regulation 45E of Victoria's Plumbing Regulations, has a short list of exemptions. A gas water heater can still be installed or replaced with gas where:
- Space: there is not enough space in the home, or no suitable outdoor space, for an electric alternative
- Apartments: the home is in an apartment building supplied by a centralised gas hot water system
- Electrical upgrades: going electric would need an alteration to the main switchboard or a distribution board, or network augmentation beyond a basic or standard connection
- Other laws: going electric would not be lawful because of another law
A gas unit can also be replaced with gas during its manufacturer, supplier or installer warranty, or like-for-like where it needs no electricity to run, and a gas unit can be disconnected and reconnected, for example during renovations.
Most Cheltenham and Bayside homes can fit a heat pump outdoor unit with standard clearances, so these rarely apply. If you think one does, we check it at the site visit.
LPG is not an exemption: the rule only covers natural gas supplied through a gas meter, so homes on LPG sit outside it, whether the LPG comes in bottles or through a pipe. Like-for-like LPG replacements remain permitted.
Why act before March 2027, not after
The rebate stack is available now. Programs and rates can change at short notice, and what applies is what is in force when your system is installed.
The Solar Victoria income threshold already tightened, dropping from $210,000 to $150,000 on 1 July 2026. Waiting longer means risking further changes.
The Victorian rebate stack, what you can claim
Three separate rebate programs apply to heat pump hot water installation in Victoria. Helcro Electrical is a VEU Accredited Provider (A003039) and a NETCC Approved Seller. All three come off your invoice, so you never wait for a refund. The STCs and the VEU discount need no paperwork from you. For the Solar Victoria rebate, we upload your quote into the Solar Victoria portal and prepare your paperwork; you upload your eligibility documents and Solar Victoria emails you the QR code, which we scan on site on installation day.
| Rebate | Amount | Who qualifies | How it's applied |
|---|---|---|---|
| Small-scale Technology Certificates (STCs) | $500–$700 | All Victorian homeowners | Point-of-sale deduction |
| VEU discount | $560 (replacing gas) | All Victorian homeowners (no income test) | Point-of-sale deduction |
| Solar Victoria hot water rebate | 50% of the price remaining after STCs and VEU, capped at $1,000 ($1,400 locally made). On a $2,950 iStore that is ~$895, so neither cap binds. | Owner-occupiers, combined household taxable income under $150,000/year, property value under $3M, system being replaced at least 3 years old | Point-of-sale deduction, after Solar Victoria pre-approval |
| Total (income eligible) | ~$2,055 on a $2,950 system | ||
| Total (income >$150k/year) | $1,060–$1,260 | STCs + VEU only |
"Locally made" is a Solar Victoria listing status, not a brand claim: specific models are assessed against local content criteria and published on a separate list, which lifts the cap from $1,000 to $1,400. On a system priced around $2,950 the cap makes no difference either way, because 50% of what remains after STCs and the VEU discount is only about $895. On the same STC and VEU figures, the higher cap only changes the outcome on systems priced above roughly $3,100 to $3,300. Ask us to confirm a model's current listing before counting on it.
From 1 July 2026, the Solar Victoria income threshold applies to the combined taxable income of all adult owners of the property, not per person. If the total exceeds $150,000, you still qualify for VEU and STCs.
Check the full rebate details at solar.vic.gov.au and energy.vic.gov.au.
What does it actually cost after rebates?
Prices below are for the unit; installation varies by system and site. An iStore 270L straight swap is about $3,900 installed including GST, before rebates. The following is based on confirmed Helcro Electrical pricing and current rebate rates (September 2026):
| System | Unit price — installation quoted separately | Full rebate stack | Unit cost after rebates (income eligible, installation extra) | Annual saving vs gas (our running-cost model) |
|---|---|---|---|---|
| iStore 270L heat pump | $2,950 | ~$2,055 | From ~$895 | $590–$1,050/year |
Sanden Eco Plus (split type): $6,760 for the unit. A straight swap is about $7,500 installed including GST, or about $6,500 after the VEU and STC rebates; Solar Victoria's rebate, up to $1,000, can come off on top if you're eligible.
The two systems move differently under the 50%-of-remaining rule. On the Sanden at $6,760, half of what is left after STCs and the VEU discount exceeds $1,000, so the cap binds and Solar Victoria pays the full $1,000. On the iStore at $2,950, half of what remains is only about $895, so no cap binds and the rebate is simply that 50%. Both qualify for STCs and the gas VEU discount. On the iStore those two come to about $1,060–$1,260; on the Sanden they are worth more, and its installed figures above already include them.
Running costs for a heat pump are around $330 per year, or closer to $100 if it runs on rooftop solar, versus roughly $915–$1,375 for a gas storage system on current Victorian tariffs, worked through with sources in our heat pump vs gas hot water comparison. The Victorian Government's own, more general estimate is that many households save around $400 a year on energy bills with a heat pump, depending on usage and the system being replaced. Keep gas for cooking or heating and you also keep the supply charge regardless of usage, which the Victorian Government puts at up to $400 a year. Measured against the iStore's ~$895 net unit cost after rebates, running-cost savings alone cover it in roughly one to two years, with installation quoted on top.
If you already have rooftop solar, the payback is faster. Set your heat pump to run during peak solar hours, typically 10am to 3pm, and the running cost approaches zero on clear days. Without solar, if you sign up to the Victorian Midday Power Saver (it needs a smart meter), power used from 11am to 2pm is free up to 24 kWh a day, so a heat pump on general supply, not a controlled-load circuit, can do most of its daily reheat in that window. Other rates on that offer can be higher.
Learn more about heat pump hot water installation in Melbourne South East
Is your Melbourne South East home ready?
This is the section only a local electrician can write. Many homes across Cheltenham, Bayside and Kingston have a single-phase supply and standard outdoor access on at least one side, but we check each house rather than assume.
Switchboard: Heat pump hot water systems draw 1–1.5kW. Most existing single-phase switchboards in Melbourne South East handle this without modification. If you're also planning solar, an EV charger, or an air conditioning upgrade in the same period, a switchboard assessment is worth doing as one job, it's more cost-effective than separate visits.
Outdoor space: Split-type systems like the Sanden Eco Plus require an outdoor unit with approximately 500mm clearance on each side. Tight courtyards and narrow side passages sometimes need siting advice before installation. We assess this as part of every quote.
Integrated systems: Helcro Electrical installs heat pumps, solar panels, and air conditioning. If you're thinking about the combination, gas-free hot water + solar to run it + reverse cycle to replace your gas heater, we can quote the full home electrification package and identify which sequencing makes financial sense for your home.
A well-planned installation in 2026 can set up your home to run on solar-generated electricity almost entirely, with running costs a fraction of what gas costs today. Pair your heat pump with a solar battery and your home can run through the night on clean energy too.
Explore our Victorian Energy Upgrades guide | Read our battery rebate guide
Your step-by-step action plan
- Check your hot water system age, find the manufacture date on the data plate (usually on the side of the tank). If it's 2018 or older, start planning now.
- Assess your income, if your household's combined taxable income is under $150,000/year, you may qualify for the Solar Victoria rebate on top of VEU and STCs (other conditions apply, including a system at least 3 years old).
- Contact Helcro Electrical for a site quote ($50 site visit), we'll assess your switchboard, outdoor space, and existing hot water configuration. No obligation.
- Confirm the rebate stack on your invoice, as a VEU Accredited Provider (A003039), we deduct all applicable rebates at point-of-sale.