Renters and tenants rights groups have welcomed state government reforms aimed at rebalancing the housing ledger with landlords.

The government announced a package of reforms on Sunday that included a cap on rental bonds, a crackdown on rental bidding, a limit on rent increases to once a year and an end to “no specified reason” evictions.

Victoria’s 1.5 million renters will also have the right to keep pets and make minor modifications such as installing picture hooks.

Other changes include establishing a landlord and estate agent blacklist and a new Commissioner for Residential Tenancies.

Tenants Victoria said the package was a great start, but the Real Estate Institute of Victoria argued it swung the pendulum too far the other way.

The reforms come as census data shows the number of households renting in Hobsons Bay and Maribyrnong is growing at almost three times the rate of new owner occupiers.

Tenants Victoria chief executive Mark O’Brien said it is virtually impossible for tenants to feel secure in their homes when they can be evicted without proper reason.

“Up until now, the concerns of renters were either ignored or dismissed – but that appears to be changing,” he said.

“The Residential Tenancies Act (RTA) is 20 years old and the holes are showing. It was made for a time when renting was only temporary, not a long-term or lifelong proposition.”

However, Real Estate Institute of Victoria chief executive Gil King argued the reforms would significantly imbalance the market in favour of tenants at the expense of “mum and dad” investors.

“The Andrews government has been short-sighted in introducing these reforms which will decimate the private rental market, ultimately driving up rents and reducing the supply of rental properties at a time of unprecedented population growth,” he said.

“All landlords should reconsider whether they want to remain in the private rental market given their rights are being eroded.”

But Premier Daniel Andrews said everyone deserves the chance to have a safe, secure and affordable home, whether they own it or not.

Consumer affairs minister Marlene Kairouz said more people were renting than ever before and for longer.

“These changes will crack down on rental bidding, make it easier and faster for renters to get their bond back, and will better hold landlords and agents to account for their actions,” she said.

Footscray renter Margaret Dunleavy said the reforms were well overdue and a welcome recognition of the difficulties faced by tenants.

“The most important thing is the ability to make a space your own,” she said.

“Often renters are paying almost the same amount as a mortgage, you just didn’t have $100,000 lying around for a deposit.”

Ms Dunleavy said finding a tenancy that would permit her two greyhounds had been challenging and she had been disheartened by the number of articles about finding a home that recommended offering to pay more than the advertised rate.

“I was chilled to my blood to be told to have a war with other renters.”