What is EUF?

EUF provides funding for businesses and homeowners wanting to make sustainability (e.g. energy efficiency) or climate adaptation (e.g. home sprinklers for bushfire protection) building upgrades.

Under these loans, lenders (financial institutions) provide finance to the property owner for the upgrade and the property owner repays the loan through council rates.

The Victorian Government has expanded EUF to enable councils to offer this finance opportunity to Victorian homeowners interested in making their homes more sustainable or climate resilient. Before this legislative change this type of sustainability loan was only offered to commercial property owners.

View the legislation

Benefits of EUF

Upgrading buildings for greater energy or water efficiency is a cost-effective way for homeowners and businesses to cut utility bills, improve building value, increase comfort and reduce greenhouse gas emissions.

However, many people face difficulty accessing finance for such upgrades. EUF can help people to obtain longer term and lower payment loans for environmental upgrades than are available under non-EUF arrangements.  These fixed interest loans are available for very long terms of up to 20 years, which means that the amount paid back each year is low. Often the loan repayments are lower than the savings on utility bills.

The availability of EUF can therefore help building owners reduce costs and improve building performance by improving building efficiency.

As EUF loan repayments are attached to the property, not the person or company, they may be attractive to businesses, landlords or homeowners who may wish to sell the property within the period of the loan.

EUF also provides a way to address differing incentives between landlords and tenants. Tenants benefit from EUF through reduced energy, water and waste costs, and improved living or working conditions (such as increased thermal comfort). Building owners increase the value of their asset and, in some cases, reduce energy and water costs (in common areas). Broader public benefits of EUF include job creation and increased access to finance for building improvements.

Support for residential EUF

The government’s Residential Efficiency Scorecard (Scorecard) is an energy performance home rating, which helps homeowners understand, compare and improve the energy performance of their home.

Government accredited Scorecard assessors visit the home and provide an energy star rating certificate.  Householders receive practical, tailored and documented advice on upgrade options to improve the rating, reduce energy costs and increase home comfort. These upgrade options can become the basis for obtaining finance.

The Scorecard provides the homeowner, lender and council with robust detailed information on the benefits provided by proposed energy upgrades. Homeowners receive tailored advice on which energy solutions will be most effective in relation to their home and goals.

View the Scorecard website


Environmental Upgrade Agreements – frequently asked questions

What is Environmental Upgrade Finance?

Environmental Upgrade Finance (EUF) is a council-based financing mechanism that gives commercial and residential building owners access to finance for sustainability or climate adaptation upgrades to existing commercial and residential buildings. Under an EUF agreement, the lender provides finance to the property owner and the local council collects repayments through the rates system. The council then passes the repayments onto the lender.

What type of buildings can access finance through an EUF agreement?

EUF may be used to upgrade existing residential and commercial buildings on rateable land across Victoria.

Can rental properties be upgraded using EUF?

Yes, commercial and industrial properties can. Normally the landlord would organise the upgrades and the EUF and make the repayments through the rates. Tenants of commercial and industrial properties may elect to contribute to an EUF loan where they will benefit from the funded works through reduced utility bills. The Local Government Act 2020 requires tenant consent before this can occur.

What type of projects can EUF be used for?

EUF may be used for works that improve the building’s energy, water or environmental efficiency, sustainability or resilience to climate change. For example, this could include installing a rainwater collection system or efficient tapware, installing on-site energy generation, improving the house Scorecard star rating, efficient lighting or appliances, reducing pollution or waste materials. Climate adaptation upgrades include upgrades that would make a building more resilient to climate change impacts, such as extreme weather or bushfires.

Where is EUF currently available?

View the Sustainability Victoria website for a list of local government areas across Victoria where EUF for business is available. Councils now have scope to also offer EUF to homeowners if they choose. Contact your local council to find out whether EUF for homeowners is available in your area.

Recent changes to EUF legislation

Prior to 6 April 2020, EUF was only available to commercial property owners, however, recent amendments to the Local Government Act 2020 enable EUF to be offered to homeowners too.

The recent amendments also clarify that EUF can be used to fund climate adaptation projects (for example to protect against flooding or bushfires).

Administration of EUF has also been simplified, removing requirements that the landowner must lodge a statutory declaration 28 days before the agreement, verifying financial information and notifications relating to the land.

Also Council Chief Executive Officers now can delegate their power to enter into an EUF where this is appropriate.

Can EUF payments be requested from tenants?

If tenants of commercial and industrial properties are formally notified of the proposal and give their consent to pay the charge, they can contribute financially. It is expected that this may occur where tenants benefit from the upgrades, for example, through reduced energy or water bills. If not all tenants agree to take on the charge, the Local Government Act 2020 allows a repayment charge to be passed through to those tenants who have provided written consent but not others.

What is the scale of loan available under an EUF agreement?

The legislation does not prescribe a maximum or minimum loan. This will be determined by the lenders.

Who is liable if the loan isn’t paid?

Under an EUF agreement, it is the lender who provides the loan funds.

The council operates more as an intermediary and is responsible for collecting the loan repayments from property owners and passes these onto the lender.  In the event of a loan default, the council is not liable for the outstanding debt. The Local Government Act 2020 specifically provides that local councils are not liable for the failure of an owner or occupier to pay an environmental upgrade loan. It also requires an EUF agreement to specify that the lending body must reimburse the council if the agreement is terminated early and the council has refunded any excess repayments collected from the owner or occupier.

Visit the Sustainability Victoria website to learn more about EUF

Page last updated: 07/04/21