New eviction laws being canvassed under a review of the Residential Tenancies Act in Victoria could lead to an increase in homelessness, the Council to Homeless Persons has said.

The proposed changes were suggested as options for reform during a two-year review of the act and would allow landlords to evict tenants without notice for late payment of rent, even if the rent had since been repaid, or for damage done to the property, even if the damage had since been repaired.

The Council to Homeless Persons’ acting chief executive, Kate Colvin, said the proposals went against the intention of the review, which was to provide greater security and certainty for tenants.

“We think that could lead to an increase in the number of people being evicted,” she told Guardian Australia. “It’s almost impossible to see how someone wouldn’t just end up sleeping on the street in that circumstance. It allows almost no time to come up with alternative accommodation.”

Colvin said homeless shelters did not have the capacity to cope with a large number of people who had been evicted under laws allowing for zero days’ notice.

“People would be left in quite disastrous circumstances if that were to happen,” she said.

Colvin said the proposal, one of many listed in the options paper on the Residential Tenancies Act released in January, would also disadvantage landlords because tenants would have no incentive to remedy damage or rent in arrears.

Eviction from private rental properties is a key cause of homelessness in Victoria, Colvin said, and people renting at the lower end of the market already accept rent hikes, poor living conditions and unrepaired damage because they are afraid of being kicked out.

“That’s where you see people in really unsatisfactory rental options because they just have so few options,” she said. “Often in that circumstance people will accept basically whatever is offered and people end up renting a shed out the back of someone else’s house or renting a place that does have a rat infestation or has mould.”

Other changes proposed in the options paper include setting a minimum standard for rental properties, setting a specific legal requirement that a property be fit for habitation and capping lease-break fees at two weeks’ rent in cases of hardship or when a person has been accepted into public housing.

The proposed changes in the options report were suggested in consultation with landlords and tenants and will be considered by the government in drafting the updated Residential Tenancies Act, which is expected to be introduced in parliament in 2018.

Colvin said introducing minimum housing standards would improve conditions for the poorest renters. Under Victoria’s current rental laws, there is no enforceable minimum standard setting out what she described as “things essential to basic standards of living” such as natural light or secure locks.

“I think people would be shocked at places where some people live,” she said. “The competition at the cheaper end of the market is so fierce, people end up in places that are frankly just dangerous.”

Increasing the supply of low-cost housing and improving renting conditions would help stem the flow of people becoming homeless in Victoria, Colvin said.

About 23,000 people are experiencing some form of homelessness in Victoria, according census data.

On Friday the Andrews government announced it would act as guarantor for $1bn in low-interest loans for registered housing associations to allow them to build more social housing stock.

Earlier this month, it sequestered 40 single crisis accommodation units for use by people sleeping rough in the CBD, who would also be provided with intensive counselling and support as part of a $9.8m package in response to a high-profile increase in the number of people camping out near Flinders Street station.