The rental markets in Victoria and Western Australia are currently facing a similar challenge: rapid population growth and a critical shortage of long-term housing. However, the legislative approaches taken by each state government couldn’t be more different.
At Tenfold Property Advisory, we believe that understanding the “why” behind market shifts is essential for making informed investment decisions. Here is a breakdown of how the “stick” and the “carrot” are currently shaping property landscapes in Victoria and WA.
The Policy Divide: Punishment vs. Partnership
While both states need to boost housing supply and encourage long-term tenancies, their strategies sit at opposite ends of the spectrum.
Victoria (The Stick): The government has leaned heavily on levies and taxes, effectively attempting to “beat” investors and developers into providing more rental stock.
Western Australia (The Carrot): The WA government is opting for incentives and funding, choosing to “motivate” the industry to bridge the gap.
Addressing the Short-Stay Dilemma
The rise of high-cash-flow short-stay rentals (holiday and business accommodation) has contributed to the tightening of the long-term rental market in both states.
The Victorian Approach: The Short Stay Levy To discourage short-term hosting, Victoria introduced a 7.4% “Short Stay Levy” on total booking fees. The goal was to make short-term rentals less profitable, forcing owners back into the long-term market. Unfortunately, for many investors who rely on that cash flow to service high interest rates, this “stick” has simply forced them to sell their properties altogether.
The WA Approach: The Incentive Scheme By contrast, WA introduced the Short-Term Rental Accommodation Incentive Scheme. Instead of a penalty, they offer a $10,000 financial incentive to owners who voluntarily transition their properties into the long-term rental market. This “carrot” has proven remarkably popular, achieving the government’s goal without creating financial distress for owners.
Boosting Supply: Development Incentives
The contrast is perhaps even more stark when it comes to new construction and land use.
Victoria’s Vacant Residential Land Tax (VRLT)
Victoria utilizes the VRLT to penalize owners of land or homes left vacant for more than six months. From 1 January 2026, this tax also applies to metropolitan Melbourne land capable of residential development that has remained undeveloped for five years.
The Cost: The tax can scale from 1% to 3% of the property’s value annually—on top of existing land tax. This punishes owners even when development may not be financially viable or profitable in the current climate.
WA’s Build-to-Rent Kickstart Fund
Western Australia has taken the lead in proactive support through its Build to Rent Kickstart Fund. This initiative provides:
No-interest loans for up to 30% of construction costs for the first three years.
Low-interest loans for up to 30% of the asset value for an additional seven years upon completion.
The Tenfold Takeaway
While the Victorian government’s strategy of “punishment” is resulting in many investors exiting the market, the Western Australian model of “assistance” is fostering a more collaborative environment for growth.
For property investors, these policy differences are more than just political trivia—they impact your bottom line, your holding costs, and your long-term strategy. Whether you are navigating the new tax hurdles in Melbourne or looking at the incentives in the West, having an advisor who understands these nuances is vital.
Are you wondering how these legislative changes affect your current portfolio or future investment plans?
[Contact Tenfold Property Advisory today for a strategic review.]