Innovative Solutions to Alleviate Victoria’s Rental Crisis: Long Leases and Shared Housing

⚡️ Highlights:

1. Melbourne has experienced the sharpest decline in available rentals, leading to increased pressure on tenants in the city.

2. The report suggests incentivizing homeowners to rent out spare bedrooms and promoting longer-term leases as potential solutions to the rental crisis.

3. The use of existing properties and land can be improved through broader permissive zoning and the redevelopment of existing homes.

4. Collaboration between for-profit and not-for-profit developers is encouraged to innovate new housing solutions and models.

5. Promoting long-term leases, educating the public about the role of investors in providing rental homes, and developing formal targets for new social housing are also recommended strategies.

Exploring New Strategies to Address the Escalating Rental Shortage in Melbourne

A recent report by REA Group, the publisher of, has shed light on innovative solutions that could potentially ease the intensifying rental crisis in Victoria. The report, drawing insights from a workshop with rental market experts and industry leaders, suggests incentivizing homeowners to rent out spare bedrooms and promoting longer-term leases as key strategies.

Melbourne’s Rental Market Under Pressure

Melbourne, among all Australian capital cities, has experienced the most significant drop in available rentals over the past year. The rental vacancy rate in Melbourne plummeted to 1.16% in November, a decrease of 0.44 percentage points over 12 months, indicating a severe shortage of rental options and escalating pressure on tenants.

Key Recommendations from the Report

  • Utilizing Existing Properties and Land: The report advocates for broader permissive zoning to allow multi-family living and the redevelopment of existing homes. This approach could optimize the use of current housing stock.
  • Tax Changes to Encourage Sub-Letting: Suggested tax amendments could facilitate alternate letting models, potentially increasing the availability of rental accommodations.
  • Collaboration Between Developers: The report encourages collaboration between for-profit and not-for-profit developers to innovate new housing solutions and models.
  • Educating the Public and Reinforcing Investor Confidence: There’s a need to educate the public about the crucial role of investors in providing rental homes and to reinforce investor confidence in the market.
  • Promoting Long-Term Leases: The report recommends encouraging long-term leases through tax concessions and other incentives, along with public education about the benefits of long-term renting.
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Addressing Social Housing and Vulnerable Renters

The report also suggests setting formal targets for new social housing as a share of the state’s housing stock. An online portal to match vulnerable renters with private property owners willing to offer below-market rate accommodation is proposed as a solution to assist those most in need.

Industry Leaders’ Perspectives

Industry leaders, including Linda Allison from the Urban Development Institute of Australia and Jellis Craig director Sophie Lyon, emphasize the potential of using existing housing stock differently and the importance of destigmatizing long-term renting. Robert Pradolin, founder of Housing All Australians, highlights that Australia’s housing crisis is a collective issue that requires a comprehensive approach.

Government Initiatives and Future Outlook

The Victorian government’s Housing Statement in September announced a range of policy changes to increase housing supply and improve tenant protections. REA Group chief customer officer Kul Singh stresses the importance of diverse perspectives in addressing the rental crisis and finding efficient ways to increase supply, encourage investment, and attract and retain property managers.


The rental crisis in Victoria, particularly in Melbourne, calls for innovative and collaborative solutions. The recommendations from the REA Group report, including long-term leases and shared housing, present a multifaceted approach to alleviate the rental shortage. These strategies, combined with government initiatives and industry collaboration, could pave the way for more sustainable and accessible rental markets in Victoria.

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