Victorian tenants are about to see a major upgrade in the help available to them, with the state government committing nearly $100 million over five years to beef up renter rights, advice, and advocacy programs.

At the same time, fresh data highlights a stark downside of years of rental reforms: thousands of landlords exiting some of Melbourne’s most desirable inner-city and bayside areas, shrinking rental supply where it’s needed most.

As reported in The Herald Sun, the funding announcement delivers $98 million for a new Victorian Renter Rights Program.

This will roll out localised advocacy services, targeted support for renters aged 55 and over, and a dedicated Victorian Renter Helpline.

It builds on $10.2 million already allocated this financial year through Consumer Affairs Victoria (CAV), effectively doubling the state’s capacity to assist tenants—from around 12,663 cases to 25,500.

These new initiatives will replace several existing services, including the Tenancy Assistance and Advocacy Program, Tenancy Central Service, and Retirement Housing Assistance and Advocacy Program.

An extra $16.4 million extends financial counselling through to the 2027 financial year.

Consumer Affairs Minister Nick Staikos described Victoria as the best state to be a renter and said the extra funding would strengthen that position after more than 150 rental reforms.

“We know that cost of living is front of mind for many Victorians and this Labor Government will always have their backs,” Mr Staikos said.

Costly repairs

Tenants Victoria chief executive Jennifer Beveridge welcomed the move, noting that many renters currently lack support and end up paying extra for heating/cooling in poorly insulated homes or making their own costly repair workarounds.

“The first thing this means is that the government has listened to the feedback and that there are not enough services to meet the demand,” Ms Beveridge said.

She added that the increased funding would speed up access to help, generate better data on problem areas, and build a stronger overall support system—though full rollout and staffing might not hit peak capacity until 2027.

But the reforms have a flip side. Rental bond data reveals significant long-term drops in active rental bonds in key municipalities since 2017—the year many reforms began ramping up.

Port Phillip (including South Melbourne), Boroondara, and Stonnington have each lost 1,000+ bonds, with Port Phillip down by over 2,000. Frankston and Mornington Peninsula aren’t far behind, with declines of nearly 1,000 and 880 respectively. These are some of Melbourne’s most popular (and job-rich) spots, where vacancy rates hover around a brutal 2.4 per cent metro-wide.

PropTrack economist Anne Flaherty called the inner-suburb losses “quite shocking,” linking them to an investor exodus driven by higher taxes, compliance costs, pandemic-era pressures, and the cumulative effect of reforms like minimum standards (from blind cord safety to pet-friendly policies).

Experts like Ray White chief economist Nerida Conisbee and Property Investor Council of Australia chair Ben Kingsley pointed to land tax hikes and the growing burden of upgrades as tipping points—particularly for smaller “mum and dad” investors who may have been operating with thin margins.

Minimal compliance

Importantly, the landlords most likely to be walking away appear to be those who chafe at any restrictions on how they operate their rentals. You know the ones—those who prefer minimal compliance, no minimum standards for things like heating, safety features, or pet allowances, and fewer obligations around repairs or fair treatment.

Reasonable landlords who were already doing the right thing (maintaining properties to a decent standard, responding to repair requests promptly, and treating tenants fairly) are far less likely to bail out over these changes.

The reforms largely codify basic decency and safety that many good operators were providing anyway, without dramatically increasing costs for them.

In contrast, the flight seems concentrated among those for whom the added layers of accountability—however modest—tip the balance, prompting sales or shifts to short-stay options.

As Ms Beveridge noted, while overall rental bonds are up 72,000 statewide since 2017, the growth is skewed to outer fringes like Melton and Wyndham or CBD apartments.

Fewer options

This creates a “geographic mismatch” for essential workers—teachers, nurses, hospitality staff—who can’t afford or commute from distant suburbs to inner jobs.

“In areas like Port Phillip or Stonnington where rental supply has declined, they’re facing either crushing commute costs or being priced out entirely,” she said. On the Mornington Peninsula, surrounded by water views, local workers have even fewer options.

Build-to-rent developments (e.g., Greystar’s projects in South Yarra and South Melbourne adding 1,300 homes) are helping plug some gaps, but managing director Matt Woodland stressed they can’t fully replace traditional investor-owned rentals.

A government spokesperson defended the reforms as leading the nation on renter rights, while emphasising the need to build more homes faster through planning overhauls.

The key takeaway? The reforms are delivering real benefits for tenants and encouraging better standards overall, but the market adjustment is hitting hardest among landlords resistant to any form of regulation—while responsible ones continue to play their part.

Original reporting by Nathan Mawby, the Herald Sun. Collated from Leftfield Communications’ daily property news feed.