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The Real Estate Institute of Victoria has stressed the need for reforms that will increase investor confidence and recentre the balance of power in the state’s tightened rental market.
The Real Estate Institute of Victoria (REIV) has called on the state government to implement balanced legislative amendments to the Residential Tenancies Act, and restore equity and much-needed investment viability in Victoria’s rental market.
In the REIV’s Striking a Balance submission, the peak body said the recent spate of rental market reforms has eroded landlords’ ability to manage their properties effectively.
Additionally, the slate of reforms has contributed towards a sharp decline in investor sentiment and rental supply across the state.
REIV interim CEO, Jacob Caine, said that the current instability of Victoria’s rental market had also been amplified by a number of factors that had severely weakened both the state’s investor confidence and rental supply.
“Chronic undersupply has been exacerbated by a sharp decline in investor confidence, as higher interest rates, increasing land taxes, and frequent legislative changes prompt property owners to sell rather than lease,” Caine said.
“The result is a shrinking pool of rental properties, fewer choices for renters, and increasing uncertainty in the rental ecosystem,” he added.
According to the institute’s findings from April 2025, rental availability remained critically low across Victoria, with a 2.5 per cent vacancy rate in metropolitan Melbourne, which then lowered to 2.1 per cent across regional areas.
REIV said that metro and regional areas’ vacancy rates sit below the balanced 3 per cent rate, and instead reflect the limited stock and rising rents that have significantly tightened Victoria’s rental market.
The institute said that the increasing strain on landlords across Victoria has led to a decline in rental market activity, with data showing that only 49,413 rental bonds were lodged during the December quarter of 2024, -1.8 per cent lower compared to the same quarter of 2023.
The decline in rental activity was also observed across active tenancies, with the total number of active residential bonds held by the Residential Tenancies Bond Authority falling to 649,978 over the period, registering 3.6 per cent lower than levels from the year prior.
Caine said that the challenges in Victoria’s rental market were compromising income sources for many everyday Victorians.
“With approximately 72 per cent rental providers owning a single investment property, retail investors, often referred to as ‘mum-and-dad’ investors, who rely on rental income for retirement, are disproportionately impacted by higher costs, regulatory burdens, and financial stress,” he explained.
Rebalancing the rental market
To restabilise Victoria’s rental ecosystem and increase the amount of available supply, the peak body said that any future changes to the Residential Tenancies Act should lighten the “excessive burdens” on property owners and managers and restore investment viability in the state’s rental market.
Following a consultation process with REIV members and broader property industry stakeholders, the institute has called on the Victorian government to strengthen investment safeguards for landlords.
Proposed reforms aim to strengthen landlords’ rights by expanding grounds for eviction, lowering breach thresholds, and extending renters’ notice to vacate to 28 days.
Caine shared that the recommendations highlight the importance of a balanced approach to addressing the state’s “persistent” rental market issues.
“While the REIV has been public in its support of protecting fundamental renter rights, our recommendations seek to address a growing imbalance in critical day-to-day legislative settings that negatively impact rental providers,” Caine said.
“This includes ensuring that private rental providers have equivalent rights to public housing providers in circumstances where renters are engaging in illegal activity in their rental property or providing misleading information on their rental applications,” he concluded.
The REIV’s submission is currently pending review by the Victorian government.
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