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By
Michael Gilbert
•
10
October 2025
Yes, you can sign a tenant on a long term lease in Victoria without falling behind market rent, and there are three big reasons why:
The biggest reason many owners hold back from offering a 2-5 year lease is the fear of falling behind the market if rents rise quickly. It feels safer to stick with the standard 12-month leases and review the rent each year.
But when you look at the full picture, the higher rent you can attract up front, plus the reletting and vacancy savings, the long-term lease often gives you a better rental return over the 3 year period.
Here’s why you can lock in a long lease confidently and still stay on pace with the market.
A growing number of renters are willing to pay more for security. Stability matters, especially for families and professionals who don’t want the fear of potentially having to move each year.
Can you imagine having young kids who have to get up and move their bedrooms every year or two? When you think about it, you can see why a lot of renters are prepared to pay extra for additional security they can stay long term.
A 2024 study found renters in Australia would pay around $72 more per week for the ability to extend their lease indefinitely. Even if that number is optimistic, it shows how much value renters place on long-term certainty.
That’s why adding about $20 per week to the starting rent for a 3 year lease is realistic in most areas especially when vacancy rates are tight. When vacancy rates are low, renters typically want to stay longer because it’s hard to get another rental, so they’ll pay more for a longer, more secure home.
These renters also tend to look after the property better. They plan to stay, so they care more about maintenance and presentation. They’ll see your property as their home. Renters are more likely to look after their home than just a place to stay.
This is the biggest myth about long leases, that you’re stuck with the same rent for years.
In Victoria, you can increase rent during a fixed-term lease, as long as the lease clearly states how.
That means you can use:
Both methods are compliant and, importantly, welcomed by most renters because they provide a little more certainty around future rent increases.
I have written an entire article on how you can increase the rent during a fixed term lease which includes the wording, legal notice periods, and examples you can copy into your lease.
👉 Read next: Can I increase the rent during a fixed term lease in Victoria
Why the MRI works well:
It tracks average rent movements across Melbourne, quarter by quarter, based on official government data (RTBA bond records). It might lag slightly behind real-time market rises and is not hyper specific to your location however over the long run, it balances out, and it’s objective and transparent for both parties.
When you use a consistent measure like this, your rent grows with the market and avoids disputes about “what’s fair.”
Every turnover costs money even if the market is strong.
When your tenant moves out and you need to find another you will most likely incur the following expenses:
That’s roughly $2,000 gone every time a tenant moves out.
To be conservative, these costs do not factor in the reduced wear and tear from better quality long term renters.
Now let’s put those numbers together.
Here’s a simple interactive calculator that models two common scenarios, the standard 12-month lease renewed each year, and a three-year fixed term lease with annual increases tied to the rent index.
It factors in:
Move the sliders to match your property and see how a long-term lease stacks up against the usual 12-month cycle.
You’ve seen how a long-term lease can outperform the standard 12-month cycle over a 3 year period.
Here’s how to structure it properly so your rent keeps pace with the market and your agreement stays compliant.
Your agent will handle all this for you however if you want detailed examples, templates, and wording you can copy, see:
👉 Can I increase the rent during a fixed-term lease in Victoria
Yes, you can, but there are some drawbacks.
The first is access and presentation. Your renters are unlikely to keep the property looking like a showroom for weeks on end.
The second is the market itself. If the fixed term lease still has six months or more to run, the buyer will probably need to purchase the property with the tenants in place. This can reduce your buyer pool and sometimes the selling price, because most buyers want vacant possession.
If, however, the property is attractive to another investor, these risks are much smaller.
The short answer is no, you cannot. A fixed term is exactly what it sounds like — fixed.
If you plan to sell, move back in, or do something different with the property, my advice is not to sign a long term lease. You cannot legally end the tenancy during a fixed term unless both you and the renter agree. In that case, you will usually need to offer a strong incentive in dollars to convince them to move out early.
Otherwise, the only way to end a fixed term lease without agreement is to apply to VCAT for an order to terminate, and that requires specific legal grounds, like proving hardship which is VERY difficult to win.
It is rare, but it can happen. For properties in good condition and with thorough tenant screening, the risk is very low, less than 1% based on our data from Cubbi Certified Renters.
If you are unlucky enough to get a bad tenant, it usually shows through late rent. In most cases, it is straightforward to remove them, although the process can take time. Your landlord insurance will often cover you for any loss, so with a good agent and a solid policy, there is little to worry about.
In my opinion, the bigger concern is the average renter. They are difficult to work with and very unreliable. They usually end up paying but always late, sometimes a few days, often a week late, but never enough to terminate the lease. They keep the property to the bare minimum standard and cause heavy wear that is difficult to claim back from the tenant. They either report every small issue and expect fast action, or make access difficult when you need trades in to maintain the property. Overall, average renters rarely breach the lease in a major way, which makes it hard to use the formal termination paths, but they are a constant drain on time and money over a long period of time.
If you use Cubbi Full Management, you are protected either way. Cubbi’s Rent Guarantee covers late or missed payments, and the Damage Guarantee means you won’t be out of pocket for tenant damages.
So even if your tenant is not perfect, your income and property are protected. Join the waitlist.
That is where your starting price and rent increase formula matter.
If you can set a slightly higher starting rent from the beginning (for example, $10 to $20 per week), it compounds over time, especially when rent increases are linked to the official Metropolitan Rent Index or Regional Rent Index, depending on your property’s location.
Overall, your rent will still increase in line with market trends, although the index can sometimes move a little slower. In most cases, the higher starting rent and reduced vacancy costs will easily offset any short term gap.
Investors who like boring, reliable property investments that build wealth over time. If you intend to hold the property for atleast another three years, a long term lease should work very well for you.
If you think you might sell, move in, or do something different with the property within the next three years, do not offer or sign a long term lease. You are better off sticking with standard one year leases until your plans are more certain.
Not really. Legally, you can access the property to meet your obligations under the lease. Things like maintenance, safety, and compliance.
But elective renovations, for example replacing carpet that is just a bit dated with new flooring, are generally not allowed. That type of work is considered elective and not permitted under the Act.
The bigger factor, aside from the legal one, is renter disruption. If the renter cannot access part of the property during the works, they are likely to ask for compensation, and rightly so.
For example, if they cannot use the only bathroom for a week, that can cause major disruption and they may request up to two weeks’ rent as compensation especially if they need to move out as a consequence. There is no fixed formula for this; it depends on the impact.
An unsafe deck, on the other hand, is something you can and should repair while the property is tenanted. It is a safety issue, and if the builders get in and get it done fast, it usually causes minimal disruption.
Overall, if your property needs renovation, get it done before you find long term renters.
With growing renter demand for more secure leases and so few long-term options available, there is a big opportunity to gain predictable, stronger returns, especially with Cubbi’s new HomeFlex Lease for Victoria.
Fewer turnovers. Consistent rent growth. Better renters.
Join the waitlist for Cubbi Full Management (starting in Melbourne and the Mornington Peninsula). Join the waitlist
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