Victoria’s real estate industry has warned that some of the state government’s changes to property laws could actually raise rents, with landlords fighting against law changes to protect tenants, warning they could backfire.

The Real Estate Institute of Victoria has pushed back against law reviews designed to secure tenure for renters. It predicts the changes, intended to give certainty to the increasing number of long term tenants, could make landlords reconsider their investments. That in turn could put pressure on supply, raising rent.

Changes to the Residential Tenancies Act could allow renters to modify properties or sign leases of more than five years. It might also restrict rent rises to once a year and ban no-pet clauses.

The government review is in response to changes in rental demographics. Private rental was previously considered a short term transitional arrangement, which ended in home ownership, or a move to social housing.

But now one-third of renters is considered “long term”, having rented continuously for more than 10 years.

The review states that those long-term tenants are increasingly older people on fixed incomes, or families with children, for whom stability is important.

An options paper was released in January for public consultation but the REIV says it “lacks balance”.

“The majority of the proposals will undermine the key stakeholders, particularly landlords, but as landlords reconsider their investment and supply levels change, [it will have an effect] on tenants in Victoria,” the institute said in its response.

The institute consulted 3000 landlords in seven sessions last month, with deep concern expressed at the proposed significant shift in the landlord-tenant relationship.

One landlord said: “If these changes occur, I will exit the market and invest in another portfolio.”

And a property manager in the REIV document said: “I am concerned that tenants are going to have more rights over the property than the person who owns it … resulting in a lot of landlords selling their properties as they have no say over what tenants can and can’t do … and the way they treat it.”

Meanwhile, it’s predicted off-the-plan stamp duty changes by the Andrews government, due to come into effect on July 1, could also affect rental supply.

Several changes are proposed to improve housing affordability.

Owner-occupiers will still be entitled to an off-the-plan stamp duty exemption, but investors will lose this long-held competitive advantage.

Frasers Property Australia is currently promoting Parkside, a 1000 apartment development in Parkville, four kilometres from Melbourne’s CBD, at the site of the 2006 Commonwealth Games Village.

Sarah Bloom, head of Fraser residential Victorian sector, said the stamp duty changes were a disincentive to investors, who were an important part of the market and could now put their money elsewhere.

“Investors are pivotal to the supply for renters. This could harm the affordability of the rental market,” she said.

Frasers is generally supportive of the hosing affordability package, welcoming cuts to stamp duty for first home buyers in the under $600,000 category.

But Ms Bloom says a drop in development presales could also hamper construction, which relies on 80 per cent clearance before banks give the green light.

“The changes have us cautious and concerned about what the impact on the market will be.”