With the new property investment rules around negative gearing and CGT coming into play, it has been estimated that the number of available properties on the rental market has decreased by approximately 1.7% in May 2026 (Melbourne rental listings only) This figure is indicative as data is limited and the market is still very much in flux.
These changes are in addition to the new minimum standards that came into effect in 2021 also impacting the number of property owners selling their investment properties over the past 4 to 5 years.
What is becoming increasingly clear for rent rolls is, PUM is becoming more about quality and less about quantity, at least while the market transitions to the ‘new normal’.
Example scenarios
Take three illustrative scenarios of Victorian agencies, all sitting at 400 PUM at the start of 2025:
Inner-metro Melbourne agency.
Investor sell-down has been significant here. Losses of 8–12% per year are common. Without acquisition, 400 PUM drops to roughly 352-368 inside twelve months.Outer-metro / growth-corridor agency.
Attrition is slightly less at around 4–6%, because first-home-buyer stock can still be tenanted. 400 PUM drops to about 375.Regional Victoria agency (Ballarat, Bendigo, Geelong, Latrobe).
Coastal and lifestyle regional stock is holding better than metro; some inland regional markets are seeing sharper investor exits where yields have tightened and land tax on modest-value stock makes an impact on the investment. Attrition ranges from 3 to 10% depending on the region.
These three examples show how specific scenarios are showing different responses to the changes.
Passive growth won’t grow PUM
When property investment is at a peak, agencies can be their own best referral partner with sales to investors leading directly to adding to the rent roll.
In the current market that has been designed to increase first home ownership, sales might stay relatively strong however the flow goes in the opposite direction with investment properties moving off the rent roll to owner occupier homes.
What strategic agencies are doing:
Buying in a buyer’s market
A contracting market is where acquisition economics benefit the purchaser. As investors sell off and PUM starts to reduce, principals may look at refining their rent rolls or in some cases, calling it a day and exiting the business.
The risk with purchasing these rent rolls is that the full impact of investor divestment hasn’t been fully realised and the PUM will continue to decrease over the coming 18 months to 2 years. It would be prudent to consider not only the value of the rent roll but also the value of potential sales as part of the purchase strategy.
Niching into the ‘new investor’ market
While the news may be filled with doom about the impending collapse of the property market due to fleeing investors, it is sensible to recognise, there is always an upside to the story.
Who’s winning under the new rules:
Existing investors holding established (grandfathered) properties
Anyone who owned an investment property at 7:30pm AEST on 12 May 2026 retains full negative gearing and the old 50% CGT discount on gains up to 1 July 2027. As competing investors exit, their asset benefits from tighter rental supply, rising rents, and reduced buyer competition when they sell.
New-build investors.
Buyers of newly constructed dwellings, off-the-plan purchases, or land-and-build packages retain negative gearing indefinitely post-July 2027, and can choose between the old 50% discount or the new indexation method on sale of the property. This is the only category the legislation rewards.
Cashflow-positive investors.
Anyone whose portfolio was never negatively geared (regional high-yield stock, dual-occupancy, rooming houses, older investors who paid down debt) is largely unaffected on the deduction side and only marginally affected on CGT. As the rental market shrinks, cash-flow positive investors will likely stay in the market and keep buying in when they can.
Build-to-rent and institutional players.
BTR was already sitting on Commonwealth concessions from 2024; the reform moves the playing field further toward them by removing the tax advantage smaller investors held over institutional capital in established stock.
Developers and demolish-and-rebuild investors.
The new-build definition rewards demolishing existing housing and replacing it with more dwellings (net increase required). Small-scale developers and knock-down-rebuild investors gain.
SMSFs holding property. SMSFs sit in a 15% concessional tax environment (10% if held over 12 months). The CGT indexation change hurts them less than higher-marginal-rate individual investors, so their relative position improves.
Specialising in attracting these kinds of investors will help sustain and grow an existing rent roll.
Agencies that grow through this cycle will have three advantages:
1. Concentration in the suburbs they want to own
2. Quality managements bought at cyclical pricing
3. Database of investors likely to buy when confidence returns.
BDH Solutions works with Victorian principals on acquisition strategy, vendor introductions, and rent roll transactions in the current market. To discuss growth options for your portfolio, get in touch.
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Not always. The market is starting to reward quality over quantity. A smaller rent roll can still hold strong value if the PUM are in the right suburbs for your REA, the property owners plan to stay, and the properties can potentially bring in future sales.
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Sales to owner-occupiers are now taking properties off rent rolls, so an agency that isn’t proactively adding new PUM, will shrink. Growing organically in the current climate will be challenging. Look at purchasing rent rolls to boost PUM.
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Start with your landlords. Negatively geared investors holding established stock are the most likely to sell. Grandfathered, new-build, cashflow-positive and SMSF investors are more likely to hold. Location also matters, because inner-metro rolls are losing PUM faster than outer-metro rolls, and regional results vary widely.