Victoria’s rental reforms: Protecting tenants … and accidentally evicting landlords

Reforms address key tenant issues; no rental bidding, limits on rent increases, stronger rights around repairs and much tighter regime around notices to vacate period. Clearer rules about bonds, including bond transfer processes when tenants change in share houses.

All seems lovely and supportive for the tenants, right? On paper, yes. It reads like a tenant’s dream. In practice, however, the rental market has responded the way markets usually respond when the compliance burden rises and risk increases: it has started quietly moving its pieces off the board.

No rental bidding (and other polite fictions)

Victoria has banned rental bidding, meaning agents and landlords cannot solicit or accept bids above the advertised rent. The policy aim is obvious: stop “auction-style” leasing and bring rents back to something resembling reality.

But bans do not remove competition; they merely change how it shows up. The queue still forms around the block outside the open. The application pack still resembles a small mortgage submission. Tenants are still competing just now in a more courteous manner, with everyone pretending the process is calm and dignified while silently wondering whether offering to water the landlord’s pot plants would breach any regulations.

Higher compliance: the rental is now a regulated product

Minimum standards and compliance obligations have expanded. Some requirements are plainly sensible; safe heating, basic security, functional locks. Others can feel like the property version of assembling flat-pack furniture with instructions written by a committee.

None of this is “free”. Compliance costs money. Administration costs money. Time costs money. And where the consequences for getting it wrong include VCAT disputes, compensation claims, delay, and penalties, many landlords, particularly smaller “mum and dad” investors, are making a simple commercial decision: sell.

Bonds, transfers, and the great administrative shuffle

Bond transfers were meant to reduce friction when tenants change in shared households. In principle, excellent. In reality, it can become a paperwork relay race: a departing tenant wants their money, an incoming tenant is late, and the landlord/agent is caught in the middle trying to keep the bond record accurate while everyone is emailing at 11.47pm.

Again: the reform is well-intended. It is also one more moving part that can go wrong, with consequences.

The punchline: fewer rentals, tighter vacancy, higher pressure

Recent reporting has highlighted what many in the industry have been observing on the ground: landlords exiting the Victorian market in significant numbers, particularly in sought-after inner -city areas. Real estate reporting, citing Homes Victoria bond data, indicates notable declines in active rental bonds in several municipalities since 2017 suggesting fewer rental properties available in locations where people actually want (and need) to live.

At the same time, the broader market remains tight. Nationally, data cited recently put vacancy rates at around 1.7 per cent, and locally many suburbs feel even tighter. When vacancy sits around the 1.5 per cent mark, tenants are not “protected” by reforms in the way policy designers imagine, they are protected in theory while competing in practice.

So, what now?

Rental reform should protect tenants from poor conditions and unfair practices. But if the settings push a critical mass of landlords to leave, the market does not become kinder, it becomes scarcer. And scarcity is famously compassionate only to the very last person who secured a lease.

The difficult truth is that tenant protections and rental supply must be designed together. Otherwise, Victoria risks perfecting the rules for a rental market that no longer has enough rentals in it.