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What Victoria’s rental shake-up means for investors
With sweeping rental reforms underway in Victoria, investors will need to rethink their strategies, with an industry expert urging them to stay informed and understand the market impact.
From November, Victoria will see the introduction of new rental reforms, including the implementation of an extended notice period as well as the removal of the ‘no reason’ notice to vacate.
Landlords will now have to provide a genuine reason to terminate a tenant's lease and give tenants a notice period of 90 days, increased from the previous 60 days.
Under the new reforms, landlords and property managers will be prohibited from accepting unsolicited rent offers higher than the listed price and will not be able to accept more than one month's rent paid in advance.
Barry Plant franchise development manager in property management, Megan Kimpton, said that changes in property regulations had historically been shown to harm the Victorian rental market.
“In Victoria, many rental providers have already exited the market, with as many as 15 per cent leaving over the past five years,” Kimpton said.
“Rising financial pressures from state-specific compliance requirements and property taxes have forced many to sell their investments.”
“This has placed further strain on vacancy rates, driving rents higher and ultimately leading to less favourable outcomes for renters.”
Kimpton said that, in addition to looking after renters, the Victorian government should ensure rental reform also considers investor interests.
“While we support legislation aimed at creating fairer outcomes for renters, we believe there must be a cautious approach to reforms targeting large-scale landlords that inadvertently place undue pressure on everyday 'mum and dad’ investors.”
Kimpton said limiting tenants' ability to pay rent upfront may have unintended negative impacts on retirees and downsizers, who may rely on their savings and super rather than a traditional income.
“In many cases, these applicants offer to pay several months’ rent upfront to provide property owners with confidence that tenancy obligations can be met, despite not having a conventional income stream.”
“While we support the overall intent of the reform, we hope that appropriate provisions are made to ensure it does not inadvertently disadvantage responsible renters who rely on alternative means to demonstrate affordability.”
There will also be changes made to the framework for a rent review, ensuring that more factors are taken into account when the Victorian Civil and Administrative Tribunal (VCAT) is determining if a rent increase is fair and justified.
The changes include taking into account the size of the proposed rent increase compared to the current rent, as well as any improvements made to the property since the last increase.
Additionally, landlords will also have to ensure that their property meets all minimum standards before it is advertised on the market.
According to Kimpton, the new rental reforms may cause financial stress for homeowners and investors, especially under the ‘no reason’ notices and the extended notice periods.
“The removal of this particular notice also limits a property owner’s ability to regain possession outside of prescribed reasons,” she said.
On the other end of the property sector, agents will be required to interpret new rules, update processes, and ensure compliance while supporting both renters and landlords.
Kimpton said that the increased frequency of the reforms has also placed more pressure on property managers.
“With limited clarity around how the latest changes – set to take effect in November – will function in practice, property managers are once again responsible for interpreting the legislation, adjusting processes, and ensuring all clients are supported and informed.”
“Despite these challenges, property managers continue to demonstrate resilience, professionalism, and adaptability, working tirelessly to provide the best possible experience for both renters and rental providers,” she concluded.