Melbourne renting: End to rental cap discussions could keep more landlords active, but housing crisis is years from over

A decision to ignore Greens party calls for rental caps in Australia has sparked hopes for an end to a landlord exodus in Victoria. But an end to the rental crisis is still years away.

There are hopes a federal government decision not to back rental caps will help stop Victorian landlords exiting the market, but a solution to long queues at rental inspections is still years away.

A government decision to rule out rent caps has sparked hopes a Victorian landlord exodus could be stemmed.

The announcement was made by national cabinet today, alongside proposals for 1.2 million new homes to built in the five years from July 2024 and a $3bn New Home Bonus for the states and territories that deliver the most new housing.

While interstate tenants have been awarded stronger rights — including requirements for reasonable grounds for evictions and barring landlords from raising rents more than once a year — the measures are already in place in Victoria.

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After weeks of speculation the Victorian government might consider a Greens policy proposal to implement a two-year ban on raising rents, a decision by national cabinet to reject the idea has been welcomed by the state’s key real estate groups.

Real Estate Institute of Victoria chief executive Quentin Kilian said it was a win for “common sense”.

“And I’m extremely hopeful we will see investors now hanging on to those properties rather than bringing them on to the market,” Mr Kilian said.

He warned tenants shouldn’t expect instant relief, however, with the key to addressing the issue an increase in the supply of homes that would still take years to be built.

The REIV boss added that in the meantime he was concerned other states might pick up on further Victorian Tenancy Act changes implemented in 2021.

REIV chief executive Quentin Kilian.

“I fear for them a little bit,” Mr Kilian said.

“It is, in our opinion, skewed very much towards one party and not to the rental provider.”

Recent PropTrack figures revealed 29 per cent of Victorian home sales in June were properties that had been listed for rent since the last time they sold, showing a higher than normal share of the market was investors getting out.

PropTrack economist Angus Moore said the decision not to proceed with further regulatory reform could be positive news for landlords as it would provide more certainty about their investments.

Master Builders Australia chief executive Denita Wawn said the decision to reject the Greens proposal had averted a “harmful intervention in the rental market”.

“With parliament returning in a matter of weeks, it’s imperative the Greens and Opposition now put politics aside and pass the Housing Australia Future Fund and housing supply bills,” Ms Wawn said.

“We cannot afford to play politics with the lives of many Australians who are struggling to absorb the increases in the cost of living and housing costs.”

Rental markets will be a major beneficiary of federal government funds that reward states doing more to address housing supply.

Tenants Victoria’s community engagement director Farah Farouque said they welcomed federal funding for more housing and were particularly looking forward to seeing the upcoming housing statement from the Victorian government which would hopefully contain ambition around renters rights.

Urban Development Institute of Australia Victorian chief executive Linda Allison also lauded incentives to streamline housing supply and planning, but said the decision not to implement rental capping was “a significant win”.

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Originally published as Melbourne renting: End to rental cap discussions could keep more landlords active, but housing crisis is years from over