A Warrnambool man who has applied for 20 rentals without success has been forced to live in a tent.
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Daniel Sheehan is paying $180 a week for a site at a camping ground, which is just $20 more than he paid for his previous rental.
However, he said that property was now listed for $260 a week.
Mr Sheehan said he had spoken to a number of people who were in the same boat as he is.
"I've been in a tent for basically 10 months," he said.
Another south-west woman, who asked not to be named, said she and her partner were forced to move back in with family when they found out their rental was being sold.
The woman said they were left with no choice after applying for a number of properties without success.
Real Estate Institute of Victoria president Leah Calnan said there was an urgent need for more rental accommodation across Victoria, with only 1.1 per cent vacant properties in Warrnambool.
"Healthy vacancy rates should be around 4 per cent: most of the state is sitting at 1 or 2 per cent," Ms Calnan said.
She said increased demand had pushed up prices.
"With changes to the Residential Tenancy Act coming in next year, landlords remain confused and cautious about losing control over their investment," Ms Calnan said.
"Our members have reported to us that many homes have been sold or are being kept off the market, leading to a surge in housing demand.
"With competition for housing at a high, many families are struggling to put a roof over their heads, which puts a lot of pressure on local welfare groups."
Ms Calnan said it was the perfect time for people to consider putting their property on the rental market.
"With rising rents and increased demand, now is a great time to rent out your investment property," she said.
A government spokesperson said there was no evidence the reforms had resulted in fewer properties becoming available.
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