A move to give Victorian tenants more rights risks driving landlords out of the market, the state's real estate institute warns.

The state Labor government last month announced reforms including the scrapping of a blanket ban on pets in rentals, allowing tenants to make minor modifications to properties, and the creation of a blacklist for dodgy landlords and agents.

But the Real Estate Institute of Victoria has warned the proposed changes mean some landlords are already indicating they want out of the rental market.

“I think we need to be mindful that a portion of the market may decide to exit … because they (the reforms) are taking away their choice,” REIV vice-president Leah Calnan told said.

“They may not want a cat that’s going to cause marks on the floorboards.”

But Treasurer Tim Pallas rubbished the REIV’s concerns, and says the reforms will lead to a fairer and more balanced system for tenants.

“Let’s not distort this debate into something that it’s not. This is a package of fair and reasonable reforms that look after the interests of people who call … those houses their homes,” he told journalists in Northcote on Sunday.

“Given that we have high levels of pet ownership in owned property, you would expect to see people being entitled to a single dog, a single cat, a budgerigar … unless there’s a compelling reason why not.”

Mr Pallas railed against landlords’ attitudes to pets alongside Labor’s Northcote candidate Clare Burns, who let slip she and her housemates owned a “secret cat”.

“I’m not supposed to say that I do because it’s a secret pet,” Ms Burns said.

“He’s much loved, he’s very inconspicuous and is not a problem at all for the property.”

The government’s proposed tenancy reforms also include plans to introduce long-term leases, establish of a commissioner for residential tenancies, ban rent bidding, force landlords to disclose the presence of asbestos and restrict rent increases to once a year.

Labor is using the reforms to try and hang on to the seat of Northcote in a by-election on November 18.