Victoria’s rental market is about to undergo another shake-up.

From October 2025, it will become illegal for landlords and agents to encourage tenants to offer more than the advertised rental price.

The aim of this is to crack down on “rent bidding”, which the government claims is fuelling unsustainable rent increases and creating even more stress for renters already struggling in a tight market.

Now, while on the surface this sounds like a win for tenants, I think we need to pause and ask, “Will this actually solve the underlying issues?”

Or is this just another well-meaning policy that fails to tackle the real cause of our rental crisis?

What is rent bidding and why the crackdown?

Rent bidding happens when prospective tenants offer to pay more than the advertised rental price to secure a property.

Sometimes this is encouraged (subtly or overtly) by property managers, but often it’s driven by the tenants themselves,  desperate to secure a home in a market where competition is fierce.

The Andrews and now Allan governments have framed this as an unfair practice that pits tenants against each other, pushing up rents beyond what’s reasonable.

Harriet Shing, Victoria’s Housing Minister, said the ban is about “leveling the playing field” and reducing renter anxiety.

But let’s be clear,  rent bidding is a symptom, not the disease.

The disease is a lack of rental supply.

And no amount of tinkering with leasing rules will change that.

The real problem: chronic rental shortages

Victoria’s rental vacancy rate is sitting near historic lows, well below 1% in many suburbs.

That means for every rental property, there could be dozens of applicants.

In that environment, it’s human nature for some renters to try to outbid others to secure a roof over their heads.

Banning rent bidding doesn’t change the fact that demand is massively outstripping supply.

If anything, it risks making the market even more rigid and less transparent.

Remember, agents and landlords don’t create rental shortages.

The shortage stems from years of:

• Underbuilding, especially of medium-density and affordable housing.

• Planning bottlenecks and red tape that slow down new supply.

• Investor fatigue as rising costs, tighter regulation, and uncertain policy settings drive some landlords out of the market.

Without fixing these structural problems, banning rent bidding just changes how rents rise, not if they rise.

How might this play out?

Just to make things clear… most properties lease at the asking rent, but occasionally there is strong demand for a particular property and this encourages potential tenants to compete for it.

So, here’s what I think we’re likely to see once the ban kicks in:

1. Landlords adjust asking rents

Rather than advertising a property at $600 per week and receiving offers of $650, landlords and agents will simply list at $650 (or more) upfront.

The market rent doesn’t magically change just because you can’t invite offers above the advertised price.

2. Reduced transparency

Ironically, tenants could end up worse off.

At least with open rent bidding, tenants could choose whether to compete on price or not.

Now, higher asking prices will simply become the norm, with no opportunity for tenants to negotiate down in a competitive market.

3. Longer leasing timeframes

Agents will need to be extra cautious about how they handle applications, lest they be accused of encouraging higher offers even unintentionally.

This could slow down the leasing process, frustrating both tenants and landlords.

4. More discriminating landlords

If landlords can’t choose tenants on price, they’re more likely to focus on other criteria: longer lease terms, stable incomes, or spotless rental histories.

That could make life harder for renters who are casual workers, students, or anyone with a blemish on their record.

What else is in Victoria’s Rental Reform Package?

The rent bidding ban is part of a broader package of reforms aimed at improving rental affordability and security, including:

• Mandatory minimum rental standards

• Tougher rules on rent increases

• Crackdowns on “dodgy agents and landlords”

• A rental commissioner to champion tenant rights

On paper, these are positive steps.

But again, they focus on controlling rents and conditions rather than addressing supply.

You can’t regulate your way out of a housing shortage.

What should property investors do?

If you’re a property investor, don’t be spooked, instead,  be strategic.

1. Stay compliant: Make sure your property manager understands the new laws and is preparing for October 2025. The penalties for breaching rent bidding rules will likely be hefty.

2. Review your rent-setting approach: It’ll be more important than ever to price your property correctly from day one. If you underprice, you’ll miss out on returns. If you overprice, you risk longer vacancies.

3. Focus on tenant retention: With regulatory changes making leasing more complex, holding on to a good tenant is gold. Look after your renters and offer a well-maintained home at a fair price — this reduces vacancy risk and keeps everyone happy.

4. Play the long game: Despite the challenges, property remains a powerful wealth-building tool. Stay focused on fundamentals, location, property type, and long-term demand drivers like population growth and infrastructure investment.

Final thoughts

While banning rent bidding may ease some tenant anxiety in the short term, it’s not a solution to Victoria’s housing woes.

Until we see meaningful action to boost supply, through encouraging investment, reforming planning systems, and supporting new construction, the pressure on renters will continue.

As investors, our job is to stay informed, adapt, and focus on the long-term fundamentals that drive property success.

The rules may change, but the need for quality housing never will.

About Leanne Jopson
Leanne is National Director of Property Management at Metropole and a Property Professional in every sense of the word. With 20 years’ experience in real estate, Leanne brings a wealth of knowledge and experience to maximise returns and minimise stress for their clients.