Rental Efficiency Standards

Rental efficiency standards ensure that renters are not saddled with high bills due to inefficient appliances and unweatherized units.

Table Of Contents
  1. Why This Matters
  2. Policy Solution
  3. Model Policy Features
  4. Potential Limitations & Pitfalls
  5. Complementary Policies
  6. Examples
  7. Resources
COMMUNITY BENEFITAffordability, Housing, Resilience, Safety, Decarbonization, Workforce
KEYWORDSClean energy, Efficiency, Housing, Renters
REGIONState, Local
AFFORDABILITY STRATEGYResidential Decarbonization
OVERSIGHTPublic Housing Authorities, Utility Commissions, Energy Offices, City/County Government
POLICY MECHANISMLegislation, Regulation

Why This Matters

Of the approximately 35% of U.S. households who rent their homes,1 43% (vs. 24% of homeowners) experience energy insecurity.2 Rental homes are typically less efficient than owner-occupied homes, in part due to a “split incentive”—landlords are less likely to fund energy efficiency improvements when their tenants pay the bill, and tenants are less likely to make such improvements because of lack of ownership.3 In addition, the 5.1 million publicly-subsidized housing units4 across the country also suffer from insufficient investment in energy efficiency.5 Due to a combination of factors, energy use among renter-occupied homes averages 20% more per square foot than for owner-occupied homes.6

Policy Solution

Establishing rental energy efficiency standards at the state or local level is one way to resolve the problem of “split incentives” where landlords are less likely to invest in energy efficiency measures on behalf of their tenants who enjoy the benefits of such upgrades. Rental efficiency standards can improve the health and welfare of tenants while decreasing energy cost burdens.

Model Policy Features

Features of efficiency standard setting by local and state governments to improve the energy efficiency of rental housing, including publicly-subsidized units, can include:

  • Developing local rental inspection/licensing programs7 or other regulations to require energy efficiency standards for rental units that meet, at a minimum, the recommended technical specifications followed by the federal Weatherization Assistance Program.8
  • Requiring the installation of ENERGY STAR or equivalent appliances.9
  • Requiring tenant protections, such as prohibitions on landlord cost recovery through rent increases, eviction protections, displacement protections and/or assistance during needed renovations (e.g., alternative living spaces, assistance with moving or storage expenses), right to return without rescreening, grievance procedures, and anti-harassment provisions.
  • Including high road job and training or apprenticeship opportunities for energy efficiency improvements, including strategies to reach underemployed communities.
  • Should connect landlords to existing local, state, and federal programs supporting weatherization and energy efficiency measures. 
  • Should be coupled with broader contractor education programs.
  • May be coupled with low-interest financing, particularly for small landlords facing compliance barriers due to high investment costs.
  • May include “stretch” codes, with coupled incentives, that promote higher energy efficiency savings, building electrification, and smart appliances which can participate in demand response.

Potential Limitations & Pitfalls

  • Resources and administrative infrastructure to ensure enforcement of standards may pose a barrier to meaningful implementation.
  • Inadequate tenant protections pose a risk of housing loss or excessive rent increases.
  • The costs of required energy efficiency upgrades may exceed a landlord’s available resources; however, costs can be offset through reduced tenant turnover, incentives and low-interest loans, and caps on unit upgrade costs.10

Complementary Policies

Complementary policies that align with rental efficiency standards include:

  • Pre-weatherization programs and electrification readiness to maximize the feasibility of implementing energy efficiency upgrades within the building.
  • Residential building codes to codify requirements and standards for energy efficiency, solar+storage installation or readiness, and electrification readiness in new residential construction and remodels.

    Examples

    1. Minimum Energy Efficiency Standards Ordinance, City of Burlington, Vermont – Burlington Code of Ordinances 18-130: Applicability of minimum energy efficiency standards.

      Details:

      • Establishes energy efficiency standards (e.g., air leakage, insulation, heating efficiency, installation of storm windows) for high-usage (i.e. more than 50,000 BTUs per square foot across all units) residential rental properties.11
      • Exempts rental properties that have been weatherized in the last 10 years.12
      • Caps total costs per unit at $2,500, excluding any incentives the owner receives.13 
      • Enforced by City of Burlington’s Department of Permitting and Inspections.14

      LIMITATIONS:

      • Standards exclude window and heating system replacement.15 
      • Waiting lists for access to approved weatherization contractors and access to utility incentive programs are resulting in an increase in temporary waivers.16 

        2. SmartRegs, City of Boulder, Colorado – Boulder SmartRegs

        Details:17

        • Requires licensed rental housing units to meet an energy efficiency standard. 
        • All rental units operating in Boulder must be licensed.
        • Fines are imposed for violations.
        • Units failing inspection must be upgraded to meet the energy efficiency standards.
        • Program originated through a multi-agency effort that began in 2009 and was approved by City Council in 2010.
        • Units had eight years to come into compliance, and Boulder supported the process through advising and rebates.

        LIMITATIONS:

        • May temporarily take housing units offline while they are being brought into compliance with SmartRegs requirements.

        Resources

        Accessed: October 22, 2025

        1. Federal Reserve Bank of St. Louis. Homeownership Rate in the United States. Last updated: July 28, 2025. ↩︎
        2. RMI. RE+ City Cohort Action Guide: Efficiency Standards for Rentals. Accessed: October 22, 2025. ↩︎
        3. Glassman, J. and Ayyagari, S. (2021). Rental Efficiency Standards: A Win for Equity and Climate. RMI. ↩︎
        4.  U.S. Department of Housing and Urban Development, Office of Policy Development and Research. (2024 data). Assisted Housing: National and Local. Accessed: August 22, 2025; U.S. Census Bureau, 2023 American Community Survey 5-Year Estimates, DP04: Selected Housing Characteristics. Accessed: August 22, 2025. ↩︎
        5. Energy efficiency investments have been made in recent years, such as through the Green and Resilient Retrofit Program (GGRF), but the scale of investment has not met the need and GGRF unobligated balances have now been rescinded. (U.S. Department of Housing and Urban Development. [2023]. HUD Announces More than $837 Million from President Biden’s Investing in America Agenda to Improve Housing Quality and Reduce Energy Costs for Underserved Communities; A. Winkler. [2025]. 2025 Reconciliation Debate: Senate Housing Provisions. Bipartisan Policy Center.) ↩︎
        6. Glassman, J. and Ayyagari, S. (2021.) Rental Efficiency Standards: A Win for Equity and Climate. RMI. ↩︎
        7. See, for example, the SmartRegs program in Boulder, CO. ↩︎
        8. Federal Register. Appendix A to Part 440—Standards for Weatherization Materials. Accessed: October 23, 2025. ↩︎
        9. ENERGY STAR. Energy Efficient Products. Accessed: August 25, 2025. ↩︎
        10. Glassman, J. and Ayyagari, S. (2021.) Rental Efficiency Standards: A Win for Equity and Climate. RMI. ↩︎
        11. Burlington Electric Department. Minimum Housing Code Weatherization Ordinance. Accessed: October 23, 2025. ↩︎
        12. City of Burlington. (2021). An Ordinance in Relation to Chapter 18. Housing— Change re Energy Efficiency and Weatherization in Rental Housing. ↩︎
        13. City of Burlington. (2021). An Ordinance in Relation to Chapter 18. Housing— Change re Energy Efficiency and Weatherization in Rental Housing. ↩︎
        14. Burlington Electric Department. Minimum Housing Code Weatherization Ordinance. Accessed: October 23, 2025. ↩︎
        15. Burlington Electric Department. Minimum Housing Code Weatherization Ordinance. Accessed: October 23, 2025. ↩︎
        16. Burlington Electric Department. Minimum Housing Code Weatherization Ordinance. Accessed: October 23, 2025. ↩︎
        17. City of Boulder. Smart Regs Guide. Accessed: August 25, 2025. See also: City of Boulder. History of SmartRegs. Accessed: August 25, 2025, and City of Boulder. SmartRegs FAQs. Accessed: August 25, 2025. ↩︎