A record number of rental providers are listing their properties with KR Peters as it becomes more and more expensive to hold multiple properties in Victoria.

KR Peters Director Peter Nicolls said about 27 per cent of properties entrusted to his sales team are being sold by investors exiting the property market.

That per centage could rise further if the state government goes through with rumoured plans to introduce tougher rent caps in Victoria.

At present landlords can raise rents once a year. It is believed the state government is considering lengthening that to once every two years.

The reform could also include caps on the amount rent can go up, as well as a tax on hotel stays and short term rentals including Airbnb.

Premier Daniel Andrews said "everything is on the table" as the government considers ways to boost supply in the long-term rental market.

However, Mr Nicolls fears the exact opposite will happen with more landlords forced out of the market because of rising costs and onerous laws.

"Anything that happens that is detrimental to or not in favour of landlords is going to create an even bigger exodus," Mr Nicolls said.

"Costs for landlords are extremely high. Interest rates have gone up 4 per cent, new compliance laws relating to gas and electrical safety, which is mandatory every two years, land tax and insurances have also risen, but rents have not increased proportionally.

"And although property prices are rising, they aren't at a level that makes property an attractive investment.

"All Daniel Andrews is going to do is exacerbate the existing problem by bringing in further pain for landlords."

Mr Nicolls said former rental properties were being purchased predominately by downsizers, especially older individuals and couples wanting to take advantage of superannuation breaks.

He said first home buyers and immigrants were also beneficiaries of properties leaving the rental market.

"At the end of day rent caps are not addressing the problem of the rental shortage. In every other country that this has been tried it hasn't worked. All it will do is create more pent up demand.

"The government should stop interfering and let the market sort itself out."

Real Estate Institute of Victoria CEO Quentin Kilian agrees.

“This decision to cap rents, if they proceed with it, will cause untold damage to an already fragile rental market in Victoria – already under duress from land tax increases, interest rates rises and increasing regulation," Mr Kilian said.

 “What is needed is a measured approach, in consultation with industry, to incentivise sustained supply, not a knee jerk reaction that smacks of political opportunism. 

 “If rent is capped and cannot move with the market, investors are unable to respond to cost movements such as increasing interest rates, maintenance etc. They are very likely to take their hard-earned savings elsewhere, which is what we are already seeing as a response to the increases in land tax.” 

For advice on the state of the rental market contact a KR Peters real estate expert at Officer 5943 1111 or Wantirna South 9800 0000 or email sales@krpeters.com.au