Victorian build-to-rent landlords dodge new minimum lease terms

Thousands of Melbourne rentals have just been spared from a new wave of government regulation. Picture: Jason Edwards.

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The Victorian government has quietly backed away from a plan to set minimum 12-month lease terms for thousands of Melbourne rentals.

A proposed change to the Land Tax Act 2005 would have removed a deduction offered to build-to-rent operators from January 1 next year, unless they set the minimum lease term.

Industry groups challenged the plan, citing research showing that between 10 and 30 per cent of tenants signing on for leases in the city’s tenants-only complexes had specifically sought shorter terms.

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They also warned removing the tax benefit could have impacted attracting much needed development to build more rental homes across Melbourne.

The city is currently Australia’s capital for build-to-rent apartments, which effectively replace mum and dad investor landlords with corporate groups and super funds.

Earlier this week the Victorian government acknowledged 1000 build-to-rent apartments had been built in the 2023-2024 financial year, with a further 18,200 under construction.

An artist’s impression of LIV Aston build-to-rent complex in Melbourne.

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Inside one of the apartments at Greystar’s Haiku Claremont complex in South Yarra.

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The changes requiring the minimum term were removed from the State Taxation Acts Amendment Bill 2025 just prior to its passage into parliament late this week.

In 2020 the Victorian government created a tax benefits program for build-to-rent projects that has helped it to become the nation’s top destination for developers planning such builds.

It is understood the decision to remove the minimum terms requirement is subject to further discussion with the property industry.

Property Council of Australia Victorian executive director Cath Evans said the change was vital to accommodate a wide range of renters including couples separating, people working interstate for short periods, families completing home renovations who needed the flexibility of shorter leases.

“So we were very pleased to see the government took our advice and has amended the policy as it went through,” Ms Evans said.

The Beach House build-to-rent complex by Gurner.

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Greystar’s Gladstone complex in South Melbourne.

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She added that with the change maintaining stability for the build-to-rent sector, it was hoped more operators would be willing to undertake developments in the space and help boost the supply of new homes for tenants in Melbourne.

“There is a significant need to grow the BTR sector further as part of our broader need to deliver more homes for Victorians,” Ms Evans said.

“A more competitive property taxation regime is critical across all parts of the housing market to keep investment flowing and delivering the homes our communities urgently need.”

Build-to-rent projects typically cater for Melbourne’s higher-priced rental market, with many operators charging more than $800 a week for two-bedroom residences, but offering significant levels of luxury ranging from pools and gyms to podcasting and work-from home spaces around the complexes.

The Property Council’s Victorian executive director Cath Evans has welcomed the government decision. Picture Jake Nowakowski.

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Salta’s Fitzroy & Co build-to-rent project in Fitzroy North.

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With operators typically seeking to engage tenants long term, leases of up to three years are not uncommon where would-be residents are seeking security.

Traditional residential tenancies do not currently have minimum lease terms, with most set at one year before rolling over to a month-by-month arrangement — or being renewed for another 12 months.

Tenants Victoria chief executive Jennifer Beveridge said they would be speaking with the government further about creating more stability and security for tenants.

“The government have said they want to consult more with renters, and we’ll be calling for more availability of longer term options,” Ms Beveridge said.

“Build-to-rent properties are built for the express purpose of remaining rental homes. We should take this opportunity to give people real security to stay there and make homes in them.”

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