1000s of Victorian landlords flee top suburbs over rental reforms

Three Melbourne municipalities have had active rental bonds decline by 1000 or more since 2017.

Thousands of Melbourne landlords are walking away from some of the city’s most sought-after locations in response to government policies.

Residential tenancy bond data shows that in the past year there are 10,274 fewer rental bonds active across the state.

But at local council levels the data shows “shocking” long-term declines of up to 2000 less active bonds, indicating similar declines in the number of rental homes available, in some of the state’s most sought-after municipalities from Port Phillip to Boroondara and Stonnington, since 2017.

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That was the year the Victorian government commenced a litany of rental reforms that’s now spiralled to 150 changes for landlords to address.

Once-affordable Frankston is also down almost 1000 rentals in the timeline, with a 989 home decline, closely followed by the Mornington Peninsula, where there are 880 fewer bonds active now amid a brutal homelessness crisis that has made the municipality one of the state’s most likely to have people sleeping rough.

Further Homes Victoria data shows tenants are paying the price, with Melbourne’s vacancy rate just 2.4 per cent in June this year, after having averaged 5 per cent from 2020 to 2022.

This two-bedroom unit in South Melbourne is advertised at $700 a week. It is located in the Port Phillip municipality.

In nearby Stonnington, this two-bedroom apartment in South Yarra is listed at $680 a week.

In regional Victoria, the number is even worse at 1.8 per cent, the toughest it has been for renters since March, 2022.

Census data shows tenant demand is growing, with stats from 2021 indicating 537,865 rental households accounted for 30.2 per cent of Greater Melbourne’s homes, up from 472,462 (30 per cent) in 2016.

Overall, Victoria has 72,000 more rental bonds active today than it did in 2017.

But experts have raised concerns that the areas behind the bulk of the increase are on the city’s fringes, including Melton and Wyndham, and apartments in the City of Melbourne — accounting for almost 40,000 of the increase.

In Bendigo this three-bedroom house will cost renters $900 a week.

PropTrack economist Anne Flaherty says declining rental availability in inner-Melbourne suburbs is “quite shocking”.

PropTrack economist Anne Flaherty said the decline of rentals in desirable areas was “quite shocking” as the property market generally should have grown over the timeline, given population increases.

“A lot of it is to do with the exodus of investors we saw over several years,” Ms Flaherty said.

“There’s high taxes and high compliance, and a period during the pandemic where there was a moratorium on evictions, which put pressure on landlords and there were rents decreasing and property values increasing. And that caused investors to sell off.

“It’s improving, but it’s nowhere near the level needed to recover.”

Victoria’s Hardest Hit Rental Markets

LGA
Jun 2017
Jun 2024
Jun 2025
Decrease since 2024
Decrease since 2017

Port Phillip
22,199
20,868
20,185
-683
-2,014

Boroondara
19,913
19,126
18,361
-765
-1,552

Stonnington
22,453
22,083
21,376
-707
-1,077

Frankston
13,792
13,359
12,803
-556
-989

Mornington Peninsula
11,268
10,500
10,388
-112
-880

Yarra Ranges
6,840
6,675
6,355
-320
-485

Warrnambool
3,415
3,031
2,973
-58
-442

Maroondah
9,104
9,237
8,808
-429
-296

Greater Bendigo
10,391
10,255
10,127
-128
-264

Campaspe
2,275
2,064
2,031
-33
-244

Source: Homes Victoria

She also noted that in some areas, like the Mornington Peninsula, investors might be looking to skirt rental regulations by pivoting their homes to short-stay rentals as holiday homes.

The Morington Peninsula council’s short-stay rental register had 2294 homes on it in 2019, which rose to a peak of 3080 in 2023, before dropping slightly to 2860 in the most recent data from 2024.

Since 2017, rental reforms announced for Victoria have included minimum standards for rental homes requiring everything from blind cord anchors to be installed, to stopping landlords from discriminating based on pet ownership.

Separate Ray White data shows that since land tax increases were brought at 2024’s start, landlords had auctioned off 140 homes in Craigieburn, 100 in Reservoir, and more than 50 in half a dozen more suburbs — mostly in the city’s north. This does not include rentals sold by other firms or private treaty.

Frankston was once an affordable area, but now homes like this rent for $650 a week.

Ray White Group chief economist Nerida Conisbee says land tax costs are likely tipping landlords over the edge and forcing sales.

The firm’s chief economist Nerida Conisbee said with many affordable areas, it was likely landlords had been tipped over the edge by land tax and meeting minimum standards costs meaning their investment was no longer viable.

“For investors who don’t have a lot of cashflow, those higher land taxes could push it from being viable to no longer viable.”

She added that higher priced neighbourhoods losing large numbers of rental homes could also be impacted by increasingly few landlords being able to afford properties in those areas — leading to more selling than buying in.

Real Estate Institute of Victoria chief executive Toby Balazs said the problem was likely to get worse.

“Unless there’s greater incentive for new builds and investors to come into the market, then the challenging rental market is unfortunately going to continue,” Mr Balazs said.

Property Investor Council of Australia chair Ben Kingsley said the data could also suggest long-term landlords were selling homes rather than upgrading them to meet an ever-growing list of rental standards.

This four-bedroom house in Echuca, located in the Campaspe council area, will sent renters back $740 a week.

Property Investment Council of Australia chair Ben Kingsley says long-term landlords are the most likely to have been selling up.

“They are the ones who have been servicing the properties for tenants for decades and have just had enough of the government, and taking their funds to a more accommodating property market to invest in,” Mr Kingsley said.

“And that’s a bad outcome for the economy, and for the movement of investment capital which is essential to having a thriving economy. And that’s what happens off the back of such stringent rental reforms.”

Tenants Victoria chief executive Jennifer Beveridge said while it was good to see increasing rental supply broadly, the concentration in outer suburbs could “create serious challenges for workers”.

“A teacher or nurse might be able to find a rental in Melton, but if they work in Port Phillip or Stonnington where rental supply has declined, they’re facing either crushing commute costs or being priced out entirely,” Ms Beveridge said.

“This geographic mismatch between where people work and where they can afford to live is fracturing communities and forcing essential workers away from the areas they serve.”

The renters advocate said they were often hearing from tenants being forced to choose between affordable housing and being close to work, and declines in supply in Boroondara, Stonnington and Port Phillip where there are high concentrations of jobs was resulting in even well-paid professionals struggling to get a home near their employer.

Tenants Victoria chief executive Jennifer Beveridge says increasing rental home numbers are good, but the distribution of them is problematic.

In Melbourne’s outer east, this three-bedroom townhouse in Croydon will cost renters $675 a week. It’s one of the areas that has had the biggest falls in active rental bonds.

“And hospitality workers, aged care staff, and other essential workers who keep the Mornington Peninsula’s economy running have nowhere to go – they can’t move further out because they’re surrounded by water,” Ms Beveridge said.

One of Australia’s most active Build-to-Rent players, Greystar Australia have added about 1300 homes to South Yarra and South Melbourne in the past few years, offsetting even worse results for renters in the two areas.

But managing director Matt Woodland said with up to 50 new tenants signing on a month the two complexes would be fully leased by mid next year.

“The general feedback (from tenants) is that they have loved the simplicity of being able to lease here, given you can book a tour and apply online,” he said.

While build-to-rent had a role to play in remedying the housing crisis, he said it wasn’t designed to replace the traditional mum and dad investor land lord.

Greysta’s first build-to rent project in Victoria, the Gladstone, in South Melbourne.

Greystar Australia managing director Matt Woodland says while they have helped boost supply in one of the city’s areas losing the most rental homes, they aren’t a replacement for traditional investor-owned rental homes.

Mr Woodland said getting more build-to-rent complexes up and running would require either improvements in the cost of building, or government policies to lower regulatory costs and others associated with providing homes.

A government spokesperson said they were leading the nation for renter’s rights, but had more to do.

“The best way to make housing fairer for young Victorians is to build more homes faster – that’s why we’re delivering the biggest overhaul of Victoria’s planning laws in decades, bringing Victoria’s old-fashioned NIMBY planning laws into the modern era,” they said.

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