The industry is calling on the Victorian Government to carve purpose-built student accommodation out of the proposed break lease compensation caps, or develop a tailored framework that reflects the sector's academic-year operating model and limited ability to mitigate loss outside peak intake periods.
The Student Accommodation Council notes the industry operates on academic-year leasing cycles and depends on consistent occupancy to support long-term investment.
Student Accommodation Council Executive Director Dr Adele Lausberg said purpose-built student accommodation is not the same as a standard rental property and should not be treated as one under break lease rules.
"Victoria is a magnet for the brightest young minds from around the globe. Our education sector is a huge drawcard for international students, many of whom rely on purpose-built student housing.
"Student numbers are increasing and we cannot afford to drive away more projects that would house the students that play such a vital role in our economy.
"Student accommodation is designed around the academic year. If a student leaves after the main leasing period, particularly after semester has started, that room may be very difficult or impossible to re-let for the remainder of the year," Dr Lausberg said.
"A capped compensation model may sound simple, but for student accommodation it shifts substantial unrecoverable vacancy risk onto providers and weakens the investment case for new projects."
"Sydney is already showing the consequences of policy settings that make student accommodation harder to deliver. Despite acute housing pressure, Sydney's identified pipeline is materially lower than Melbourne's, and only a small share of those beds are currently under construction," Dr Lausberg said.
Industry research shows that international investment is leaving Victoria at scale. Mandala's Attracting International Capital: The Impact of Taxes on Global Institutional Investors report found Victoria's absentee owner surcharge prevented the development of a 201-bed student accommodation site in Melbourne, costing the state an estimated $60 million in lost construction activity and $3.8 million in tax revenue.
"Melbourne is one of Australia's most important education destinations. At a time when the city needs more dedicated student housing, Victoria should be strengthening investor confidence, not introducing new uncertainty," Dr Lausberg said.
"These are capital-intensive, long-term projects that depend on regulatory certainty. In Victoria, feasibility is already being tested by the Absentee Owner Surcharge, and further uncertainty through break lease reforms risks making Melbourne less competitive for the global capital needed to deliver new student housing.
"This is about getting the balance right. Renters should be protected, but reforms should not unintentionally make it harder to deliver the student housing Victoria urgently needs."
