The news coverage said the Victorian Government backed down on gas. For hot water, it didn't.
Under Victoria's gas hot water phase-out, from 1 March 2027, a gas hot water system in an existing Melbourne home that breaks and can't be repaired has to be replaced with an electric one. That is the whole trigger. A working system can stay where it is, and you can keep servicing and repairing it for as long as it holds up. Gas cooktops and gas heating in owner-occupied homes are left alone. Exemptions cover homes where going electric isn't practical, and rental properties sit under a stricter version of the rule.
Key takeaways
- Nothing has to happen while your gas hot water system still works.
- Owner-occupiers can choose any electric system at replacement, electric storage included. Landlords must install a heat pump.
- A pilot-light storage unit, the kind with no power lead, can be replaced like-for-like with gas.
- Budget for the electrical work as well as the unit. That is where switch costs move most.
- We don't expect heat pump prices to drop once current rebates shrink.
What does Victoria's gas hot water phase-out change on 1 March 2027?
It stops a failed gas hot water system in an existing home from being replaced with another gas unit. It does not force anyone to remove a gas system that still works.
The rule sits in the Building and Plumbing Amendment Regulations 2025, gazetted under the state's Gas Substitution Roadmap. The Department of Energy, Environment and Climate Action (DEECA) sets it out in its residential building electrification guide: once a gas hot water appliance breaks and can't be repaired, the replacement has to be electric.
The headlines have muddied this, so here is how the common claims compare with the regulations.
What the headlines suggest
What the rule says
Only heat pumps will be allowed
Owner-occupiers can install any electric system. The heat pump requirement applies to rentals.
The government scrapped the gas ban
Requirements for gas heating and cooktops in owner-occupied homes didn't make the final rules. The hot water rule did.
It only applies to rentals
It covers all existing homes. Rentals carry extra conditions.
Working gas systems must come out
The trigger is failure.
Bottled gas is caught as well
LPG appliances are not affected.
Electric storage is the cheapest unit to buy and the dearest to run, which is why none of the government incentives applies to it. For a house with room outside and a standard single-phase supply, a heat pump hot water system is what we recommend in most cases.
Does the gas hot water heater ban apply if my system still works?
No. Repairs and maintenance on an existing gas water heater continue as normal after 1 March 2027. The rule applies only when the system can't be repaired or safely maintained.
The line between repair and end of life matters far more than the date. A failed thermocouple, a pilot that won't stay lit, a worn tempering valve: all repairs, and all jobs a licensed plumber can usually sort in one visit.
A storage tank leaking from the cylinder is another matter, and usually the one that ends in an emergency call-out. Once the inner tank has corroded through, there is nothing to repair, and after March 2027 that system goes electric unless an exemption fits.
Plenty of older gas systems have paid for themselves several times over. Pulling one out while it still runs well, just because a date is coming, makes little sense to us. If it's sound and serviced, leave it.
We'd steer clear of second-hand gas units, though. After 1 March 2027, a used gas unit going in where a dead one came out would very likely count as a gas replacement, and no licensed gasfitter should install one without confirming the position with the Building and Plumbing Commission or Energy Safe Victoria. Any gas appliance installation needs a compliance certificate in any case, new or used.
Which Melbourne homes are exempt from the gas hot water rule?
Homes where an electric replacement isn't practical. The government's residential guide lists these grounds:
- There isn't enough space for an electric system.
- In an apartment building (Class 2), hot water comes from a centralised plant.
- Installing electric would breach another law. A heritage overlay is the usual example.
- Supplying the home would need a network upgrade from the power distributor, known as a negotiated connection.
- The switchboard would need upgrading for reasons unrelated to safety.
- The existing system runs without electricity, such as a storage unit with a pilot light. These can be replaced like-for-like.
- A gas appliance is disconnected temporarily for renovations and reconnected in the same building.
- A contract to install or replace a gas appliance was signed before the regulations started.
On paper, that list is broad, and the pilot-light line is the widest part of it. Plenty of outdoor gas storage units on Melbourne houses are pilot-light models with no power lead, so they can go back in as gas. Victoria's gas hot water phase-out lands hardest on continuous-flow units and the newer electronic-ignition tanks.
The switchboard ground is narrower than it reads. If your board needs work for safety reasons (the kind of board an electrician would flag anyway), that work isn't an exemption. It's owed regardless.
Ask your installer which exemption applies to your home and why. If they can't explain it in a sentence, it probably doesn't.
I have continuous-flow gas in a tight spot. What are my options?
Check the space exemption first. An instant gas unit in an internal cupboard or on an internal wall, with no room for a tank nearby, is the situation that exemption was written for.
Instant gas earned its popularity. Endless hot water from a box the size of a briefcase, mounted somewhere nobody sees. Take a 2000s apartment in Fitzroy with the unit on an internal wall and no balcony to speak of. On that floor plan, there may be no heat pump option at all. A block of twelve apartments with twelve gas water heaters and nowhere to put twelve tanks is in the same position.
Electric instantaneous is the option people raise next, and we rarely recommend it. A whole-house electric instant unit draws far more current than a typical single-phase Melbourne supply can spare, so it often means three-phase power or a network upgrade. That can lead you straight back to the negotiated-connection exemption.
One detail on the energy.vic.gov.au material gets missed. The centralised-plant exemption covers buildings where one shared system supplies every apartment. Your own gas unit inside your own apartment isn't covered by it, even in a large block. It has to qualify on space or one of the other grounds.
Houses are simpler. Continuous-flow units there are generally on an external wall, and there's usually room nearby for a heat pump on a small slab, even if the tank ends up down the side path.
What does it cost to replace gas hot water with electric?
A gas hot water system replacement with a heat pump involves the unit, electrical work, plumbing changes if the location moves, and removal of the old system, minus any rebates you qualify for. The total depends on the site, and any figure given without seeing it is a guess.
The electrical side moves quotes the most. A heat pump needs its own circuit from the switchboard, and the cost climbs in brick and masonry homes. Under a weatherboard or a Californian bungalow with good sub-floor access, an electrician can often run cable beneath the floor without disturbing a wall. Double brick, a slab-on-ground house, or a switchboard at the opposite end of the building is a different day's work.
Then there's the gas storage tank with no power anywhere near it, which is common on older Melbourne houses. Power has to be run to the spot. If the heat pump can't sit in the same place (it needs airflow and some distance from bedroom windows), the hot and cold pipework moves too. Add a condensate drain. Add a plumbing compliance certificate and a Certificate of Electrical Safety for the wiring.
A common worry is paying to retrofit a house where everything still works. While it works, nobody has to.
Gas to electric hot water rebate Victoria: what can you claim?
- Victorian Energy Upgrades (VEU): a discount applied by an accredited provider when a gas water heater is replaced with a heat pump, usually shown on the quote itself.
- Solar Homes hot water rebate: run by Solar Victoria for eligible owner-occupiers, with income and property-value caps and a higher rebate for systems with local content.
- Small-scale technology certificates (STCs): the federal incentive, normally built into the installed price.
Plain electric storage units attract none of these. Check your Solar Homes eligibility before collecting quotes, because it changes which systems make financial sense. The gas hot water rebate Victoria offers today is a policy setting, and policy settings get revised.
Heat pump vs gas hot water: which is cheaper to run?
A heat pump, in most Melbourne homes. DEECA's modelling shows a yearly saving from replacing gas hot water with a heat pump, and a larger one where solar panels are already on the roof.
A properly sized heat pump runs quietly, keeps up with a normal household, and costs very little to run once it's set to heat during daylight hours off rooftop solar. That timer setting is the single change we'd push hardest on any install where solar is on the roof.
Melbourne winters are the honest caveat. A heat pump pulls heat from the outside air, and on a frosty July morning in the outer east there is less of it to pull. Recovery slows. Units using CO2 refrigerant hold up better in the cold, and a tank sized properly for the household means the slower recovery never shows at the shower.
Heat pump vs instant gas hot water
Continuous-flow gas makes the gas vs electric hot water comparison closer, because it heats only on demand with no tank sitting warm overnight. Gas vs electric hot water running costs still tip toward the heat pump once you count the daily gas supply charge. Is gas hot water cheaper than electric? Than an old electric storage tank, sometimes. Than a heat pump on a timer, no.
Should you plan your gas hot water system replacement before it fails?
For a system past about ten years old, yes. A failure after 1 March 2027 means an electric replacement on the failure's timetable, and Melbourne hot water systems are most likely to give out in winter.
How long do gas hot water systems last? A gas storage tank typically lasts 8 to 12 years. A serviced continuous-flow unit often lasts longer. A storage tank installed in the early 2000s is on borrowed time.
We don't expect heat pump prices to fall. Once rebates shrink, the installed price goes up, and a rush of forced replacements after March 2027 won't make installers cheaper or easier to book.
Planned, you choose the location, get the circuit run properly, compare quotes and lock in rebates before booking. In an emergency, you get whatever can be sourced and installed that week.
What do Melbourne landlords have to install?
A heat pump. From 1 March 2027, when a rental's gas hot water system fails and can't be repaired, the replacement must be a heat pump water heater. Electric storage does not meet the standard.
Failed gas heaters in the main living area of a rental must also be replaced with an efficient reverse-cycle air conditioner. VEU discounts apply to rental providers.
The standard removes the bargain-bin option, since the cheapest compliant unit is still a heat pump. For property managers, Victoria's gas hot water phase-out mostly changes how far ahead to plan. Sourcing a heat pump after a tenant calls on a Sunday in July, with no power at the old tank's location, is a slow job.
Is it worth keeping gas just for a cooktop?
Once hot water goes electric, check what the gas connection is costing you. The daily supply charge stays the same whether you use a lot of gas or almost none, so a household left with only a gas cooktop pays the full charge for a few dollars of gas a month. If the cooktop is your last gas appliance, disconnecting removes that charge entirely, and an induction cooktop attracts a VEU discount. Gas heating can stay in an owner-occupied home. Whether it should is a separate sum.
Planning the switch
If your system is past ten years, or you're unsure whether an exemption fits your home, book a hot water assessment before the cold weather does it for you. We'll check the unit, the switchboard and the path a new circuit would take, tell you plainly whether it's a repair or a replacement, and quote the switch with every rebate you qualify for. The pipework and connections we install carry our lifetime workmanship guarantee. Book a hot water assessment with Jacksons Local Plumbing.
Frequently asked questions
Are gas hot water heaters being phased out in Victoria?
In existing homes, only at the point of replacement. From 1 March 2027, a failed gas hot water system must be replaced with electric unless an exemption applies. New homes can't connect to gas at all from 1 January 2027.
What happens to solar hot water with a gas booster when it fails?
The published guidance doesn't name these systems. The booster is a gas water heater, so a failed gas-boosted system is likely to fall under the rule. Have us check your setup against the regulations before the booster gives out, while you still have options.
Does the rule cover hydronic heating?
No, not in an owner-occupied home. Hydronic heating is space heating, which the rule leaves alone. Where one gas boiler runs both the panels and the showers, get it assessed. Heat pumps often can't reach the water temperature older panels were designed for.
What about instant hot water on bottled LPG in regional Victoria?
LPG appliances aren't affected by the Building Electrification Regulations.
Does it apply to gas pool heaters?
DEECA's residential guide includes pool heaters in existing homes under the same end-of-life rule.
My gas hot water isn't working. Do I have to go electric now?
Not before 1 March 2027, and not after it if the fault can be repaired. A good share of "dead" systems turn out to be a thermocouple, a gas valve or a pilot fault, and those are repairs. Get a diagnosis before replacing anything. Before March 2027, a gas replacement is still an option if that suits your home better.
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