How Rental Law Reforms Are Affecting Investment Property Values in Victoria

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By David Dawn, Licensed Conveyancer – Victorian Property Settlements

In recent years, Victoria has undergone sweeping changes to its residential tenancy laws — changes that are now directly influencing how investment properties are valued and sold. What was once a fairly predictable sector of the market has become one defined by compliance obligations, tenant protections, and increasing costs of ownership.

Whether you’re a landlord, property investor, or buying a tenanted property for the first time, understanding these reforms is essential. They don’t just impact management — they can significantly affect price, desirability, and legal risk.

Minimum Standards Now Affect Sale Value

Since March 2021, all Victorian rental properties must comply with a range of minimum standards. These cover everything from fixed heating in living rooms to functioning deadlocks and safe electrical installations.

Properties that don’t comply can’t legally be leased, meaning a buyer purchasing a non-compliant property may be unable to collect rent until upgrades are completed.

This has created a two-speed market:

  • Well-maintained properties fetch premium prices from investors

  • Older homes needing compliance work often sell at a discount to account for upgrade costs (typically $5,000–$10,000)

Buyers must now factor this into pre-purchase decisions. Sellers should expect closer scrutiny and possibly requests for compliance documentation.

Stricter Rules on Rent Increases and Evictions

Rental providers can now only increase rent once every 12 months for periodic leases, and "no reason" evictions are no longer permitted.

Ending a tenancy has become a more complex, structured process:

  • Specific reasons are required

  • Notice periods are longer

  • Many terminations must go through VCAT

For investors, this means reduced flexibility and an increased administrative burden, particularly in areas with older housing stock or more transient tenants.

The result? Properties that are easier to manage and re-let — such as townhouses and new apartments — are now more attractive than those with high maintenance or complex tenancies.

Recurring Safety Check Costs Add Up

Under the new laws, landlords must arrange:

  • An electrical safety check every 2 years

  • A gas safety check every 2 years (if applicable)

  • Annual smoke alarm testing

These are not optional. Evidence must be produced upon request by the tenant, agent, or Consumer Affairs Victoria.

While safety is vital, these compliance costs can range from $300 to $600 per service, adding up over time. In competitive markets, buyers are now requesting confirmation of completed safety checks as part of their due diligence.

Pet Requests Are Harder to Refuse

Landlords can no longer simply say “no pets allowed.” If a tenant wants to keep a pet, they must request permission, but refusal must be supported by a valid reason and, if disputed, must be approved by VCAT.

This has implications for:

  • Older properties with delicate finishes or shared yards

  • Apartments under Owners Corporations, where pet rules may already be restrictive

Buyers need to understand that once tenanted, these properties may become difficult to manage if they want to restrict pet access.

Investor Preferences Are Shifting

There is now a clear trend emerging across the Victorian property market. Many investors are choosing:

  • Newer homes or apartments that meet minimum standards

  • Suburbs with stronger tenant stability

  • Properties that already come with compliance documents

By contrast, homes with aged infrastructure, unclear tenancy arrangements, or deferred maintenance are experiencing valuation pressure.

In some suburbs, we’ve observed investors walking away from sales after reviewing the fine print of their obligations under the Residential Tenancies Act.

What Buyers and Sellers Can Do

If you’re buying:

  • Ask for copies of safety checks and compliance documentation

  • Have your conveyancer verify tenancy arrangements

  • Adjust your offer to reflect any immediate upgrade costs

If you’re selling:

  • Complete all necessary safety checks in advance

  • Provide a statement of compliance with minimum standards

  • Consider offering vacant possession if tenant reliability is uncertain

These steps can streamline the sale, reduce settlement delays, and protect both parties from legal risk.

The Role of Your Conveyancer

At Victorian Property Settlements, we don’t just tick boxes. When investment properties are involved, we conduct a deeper review to ensure:

  • All required rental disclosures have been made

  • You’re protected from compliance-related settlement risks

  • The contract allows for a fair and transparent review of tenancy documents

Whether you're buying or selling, we ensure you’re not caught out by the hidden complexities of Victoria’s modern rental laws.

📞 Contact us today on (03) 9783 0111
🌐 Visit: www.victorianpropertysettlements.com.au