Hot water system replacement in NSW: what the rules require

Do I need a licensed plumber and a certificate of compliance?

Yes. Replacing a hot water system is plumbing work, so it needs a licensed plumber. You can check any tradesperson's licence on the NSW Government's Contractor and Tradespeople Register before they start.

At the end of the job, the plumber must complete a Certificate of Compliance and give a copy to the person who arranged the work. It confirms the work meets the Plumbing Code of Australia and AS/NZS 3500. A straight replacement of an existing hot water system counts as minor work, so no Notice of Work is needed beforehand, but you should still get your copy of the certificate. Keep it with your house papers.

Building Commission NSW: plumbing inspection documents

A tempering valve, even on a like for like swap

In NSW, replacing a water heater means fitting a temperature control device, whatever type of heater goes in and wherever it goes. That covers a like for like swap, a different model, size or heat source, and moving an existing heater. The device can be a tempering valve, a thermostatic mixing valve, or a heater marked as temperature-limited to 50°C.

Hot water at bathroom fixtures is limited to 50°C in most homes, and 45°C in places such as aged care, childcare centres, schools and disability facilities. A few jobs don't trigger the rule, such as replacing only an element, thermostat or valve.

Building Commission NSW: temperature requirements for heated water

Gas to heat pump: the NSW discount

If you're replacing an electric or gas water heater with a heat pump, the NSW Energy Savings Scheme can take a discount off the installer's quote. The NSW Government lists indicative amounts of up to $640 when replacing an electric water heater and up to $330 when replacing a gas one.

Those are "up to" figures, not a set rebate. The actual discount depends on the installer, your location, the model, your home and the installer's costs, and you pay a minimum amount yourself. Homes that already have an energy-efficient system may not be eligible, and it depends on installers in your area offering it.

Three things to know if you go this way:

• Sign and return the nomination form before work starts. The NSW Government says you won't be reimbursed for work already done.
• The heat pump must carry at least a 5-year warranty covering the unit, tank and other manufacturer-supplied parts.
• After the install, you sign a Post Implementation Declaration and the installer takes photos as proof.

Energy NSW: hot water upgrade incentive

Why 1 January 2027 matters for heat pumps

Separately from the NSW discount, the federal Small-scale Renewable Energy Scheme creates certificates (STCs) for eligible heat pumps and solar water heaters, which usually come off the price as well. The number of certificates depends on the year of installation. For a heat pump installed in 2026 the calculation uses a 5-year period with a factor of 0.5. From 1 January 2027 that drops to 4 years and 0.4, and it keeps falling each year until the scheme ends in 2030.

In plain terms: the same heat pump attracts fewer certificates if it goes in next year. Only models on the Clean Energy Regulator's register qualify, and the rules can change, so check your quote.

Clean Energy Regulator: calculating STC entitlements

Hot water system replacement cost: comparing quotes

Prices vary with the unit, the site and what has to change, so compare quotes on what's included, not just the bottom line. Things to look for:

• Any discount or certificates shown clearly on the quote.
• For a heat pump, a warranty of at least 5 years.
• A tempering valve or other temperature control device.
• A relief valve drain that falls all the way with no tap or valve in it, run to a safe spot.
• A pressure limiting valve where your mains pressure needs one.
• Insulated pipework, at least the first 500 mm in and out of the tank.
• A level, stable base for the tank.

Building Commission NSW inspectors list the drain, the pressure limiting valve, the insulation and the base as the common faults on heat pump installs.

Building Commission NSW: heat pump installations

What you should have at the end

• Your copy of the Certificate of Compliance.
• Hot water at the taps at a safe temperature.
• The paperwork for the new unit and its warranty, and a run-through of how to use it.
• Clarity on what happens to the old unit.

If you can't sort out a problem with the work, NSW Fair Trading can help, and unlicensed work can be reported to Building Commission NSW.

Figures and rules checked against the linked NSW and federal government pages in October 2026. Amounts are indicative and can change.