Victoria’s Rental Reforms: What Owners Must Know

by Jarrod McCabe and Jordan Telfer

Victoria’s rental landscape is shifting again, with a suite of changes to the Residential Tenancies Act set to take effect from 25 November 2025. 

Building on the 130-plus reforms introduced in 2021, these latest updates prioritise energy efficiency and renter protections. 

The aim is to lift standards and curb poor practices. For investors, the implication is clear: proactive compliance to avoid fines, disputes, or lost momentum in a tight leasing environment.

The new reforms will phase in through 2027, with a final 2030 cutoff. But to ensure property investors are equipped now, we explain the key mandates, from energy upgrades to notice rules, and provide practical ways to stay competitive as renter protections strengthen.

The 2021 baseline

The 2021 updates set a safety floor for rentals. They mandated hot and cold running water, switchboard safety upgrades, anchored privacy blinds, and effective heating.

Many owners we guide have already addressed these through targeted retrofits, often replacing gas heaters with split systems to meet rising standards.

Rental energy upgrades: Key rules and exemptions

From November 25, 2025, new Victorian rules require rentals to meet basic energy standards, rolled out in steps to give owners time to prepare. 

The goal is simple: make properties more efficient to lower energy bills for renters. Here’s what changes:

• Hot water and heating: By March 1, 2027, replace any worn-out systems with energy efficient models. Basic electric panel heaters won’t count as compliant
• Cooling: Required from March 1, 2027, for new or ongoing (periodic) leases; this extends to all leases by July 1, 2030. A split-system air conditioner can handle both heating and cooling if it’s already installed and meets the rating
• Other fixes: From July 1, 2027, add draft-proofing (to seal gaps), low-flow shower heads, and ceiling insulation.

Not every property needs these upgrades – exemptions apply if they’re impossible or too disruptive. For example:

• In mid-floor apartments, there’s no way to add ceiling insulation without accessing the roof
• Flat-roof buildings often lack the space for it
• Owners’ corporations (the body running apartment blocks) might block changes, like placing an outdoor air conditioner unit on a shared wall
• Heritage-listed properties could ban alterations to preserve their look.

These exemptions aren’t automatic; you’ll need to assess your property case by case, possibly with help from Consumer Affairs Victoria. 

Ending no-reason evictions: Sharpen your selection process

The upcoming amendments, commencing 25 November, will repeal the last remaining ‘no specified reason’ notice to vacate. This provision currently allows a rental provider to end a tenancy without cause only at the expiry of the first fixed-term lease – it cannot be used if the lease has been renewed or has rolled into a periodic tenancy.

The practical implication is that rental providers can no longer end a tenancy simply because the initial agreement has concluded and they wish to replace the renter.

The system shifts toward a for-cause model. Rental providers can still issue a notice to vacate, but they must use one of the prescribed reasons under the Residential Tenancies Act, such as an intention to sell the property, the owner or an immediate family member moving in, or a breach by the renter.

This shift elevates the importance of thorough renter vetting from the outset, relying on property managers for background checks, reference calls and informed industry insights to spot red flags beyond the paperwork.

No owner is immune to difficult renters slipping through despite a solid start. So counter this by partnering with experienced property managers who trust their instincts to help prevent drawn-out tenancies that go sour.

Banning rental bidding: Set ambitious but realistic rents

Rental bidding – where prospective renters offer above the advertised price amid fierce competition – is now outright banned, moving beyond prior discouragement.

In today’s strong market, where $500 weekly listings might fetch $530 from eager applicants, this caps upside potential, forcing owners to price boldly at the outset without relying on overbids to reveal true demand.

This means owners should seek to build a buffer into initial rents, but avoid giant leaps that deter applicants and risk vacancies – think stepping ahead of the market, not leaping over it. 

Extending notices: what changes and how to plan

The period for rent increases moves from 60 to 90 days. The notice to vacate also shifts from 60 to 90 days. The second point is of most impact, and for most investors, the bigger effect is on sale timing rather than owner-move-in scenarios.

While the renter’s 14-day response window for a notice to vacate remains unchanged, it creates a significant new planning challenge when combined with the new 90-day notice period.

Consider a common sales strategy: an owner wants to sell in the strong January/February market. To do this, they typically need the property vacant by early December to allow time for presentation works like painting or new carpets.

Under the new 90-day requirement, the owner must serve notice by early September to achieve that December vacancy.

However, the 14-day rule allows the renter, upon receiving their notice in early September, to serve their own notice and be out by mid-September. This suddenly creates an unexpected 2.5-month vacancy period – and the associated holding costs – that the owner had not budgeted for.

This dilemma presents two clear paths:

• Path 1: Leave it vacant, do the work, and absorb the extra 2.5 months of mortgage costs to set up a stronger launch in the new year.
• Path 2: Bring the sale forward to avoid the vacancy. This means selling in the more crowded October/November spring market, which can mean heavier competition and pressure from the looming Christmas slowdown.

Treat it case by case. Avoid pre-emptive decisions – watch conditions, then choose the timing that protects the result.

Minimum standards from advertising: No more delays

Properties must now meet minimum standards before any marketing, including photos or open inspections.

This hits new investors, who have just bought, hardest. Even with special contract conditions for pre-settlement access, the property itself must be compliant at the time of advertising. Using marketing photos that reveal this non-compliance (e.g., reused vendor photos showing bare windows) is clear evidence of a breach and could draw Consumer Affairs fines for agents, halting the listing until fixed.

While renters know their rights and could refuse non-compliant moves, power imbalances in competitive markets make upfront enforcement logical – it’s easier for regulators to spot issues in ads than chase post-move complaints.

Heightened scrutiny on rent increases: Justify every adjustment

The new Rental Dispute Resolution Victoria (RDRV) body – designed to ease VCAT’s backlog – will expand its considerations for rent hikes. Previously, the primary check was the 12-month frequency rule (i.e., that rent can only be increased once per year). Now, the RDRV will also address the size of the increase itself, considering renter hardship, local comparables, and any property improvements.

There are no hard caps, but large jumps attract scrutiny. Owners with long-term renters, often below market after years of stability, face tougher conversations as the gap widens.

Stay close to the market to avoid disputes. Don’t defer increases for ‘good’ renters. This is especially true in long-term tenancies, where rents can fall significantly behind the market. This creates a dual problem: the chronically low rent drains funds for upgrades, while the long-term occupancy itself provides no natural vacancy to undertake those works. 

As a result, wear can build and standards slip even as expectations rise, weakening your case for a significant ‘catch-up’ increase later. Instead, make small annual adjustments and document works.

Back increases with data. Comparable rentals and a record of recent upgrades ensure reasonableness – turning potential disputes into defensible decisions.

Take home message

Victoria’s latest rental reforms elevate standards for liveable homes while safeguarding renters. 

They also reward diligent owners who act now on energy audits, renter screening, and market-smart pricing. 

By staying compliant and justified in decisions you’ll sidestep pitfalls and maintain steady returns for years to come. 

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