Government as Landlord: A Bold Solution to Housing Crisis

I build houses for a living, so I'm not anti-market. But after watching the housing market for more than two decades, I'm convinced the private sector alone won't fix housing affordability. It isn't designed to. Builders and developers build what makes a profit, and low-cost rental housing usually doesn't.

So here's a bigger idea: government should become Australia's biggest landlord, building and renting out homes at scale. Not to replace the private market, but to fill the gap it leaves.

The problem: incentives haven't worked

The numbers have been grim for years. In late 2023 national rental vacancy rates fell to around 1%, and median rents rose nearly 15% in a single year. Vacancy rates have stayed tight since. Roughly 190,000 households are on social housing waiting lists, and more than half of low-income renters spend over 30% of their income on rent. About one in five spend more than half.

For decades, the answer has been to encourage private investment:

Negative gearing and the capital gains tax discount were meant to boost rental supply. The Parliamentary Budget Office estimates they cost the federal budget billions of dollars a year (PBO costing, April 2025). Most of that has fuelled investor demand for existing homes rather than new affordable ones.
First home buyer grants mostly add to demand and get absorbed into prices.
Schemes like the former National Rental Affordability Scheme (NRAS) produced some affordable rentals, but nowhere near enough, and many have since returned to market rent.

Meanwhile, social housing (public and community housing) has stagnated at around 3 to 4% of all dwellings. Affordable rental projects simply aren't attractive to private developers, even with subsidies. That's not a criticism. It's how a market works.

Rather than pouring more money into incentives that delay action, we could invest it in actually building homes.

Government's advantages: land, borrowing and planning

Government is well placed to build housing at scale because it already holds the tools no private developer has.

Land

Land is the biggest single cost in housing. Governments own large amounts of surplus land: unused parcels, old school sites, decommissioned facilities and rail corridors. A Western Australian study identified 30 government-owned sites, about 62 hectares, that were idle or earmarked for sale and could instead deliver an estimated 864 affordable and social homes.

Instead of selling public land to the highest bidder, government could keep it and build on it. That takes the land cost out of the rent and keeps the asset in public hands for good.

Planning and approvals

Government controls the zoning and approval levers. Where it is both developer and regulator, projects can move faster, and housing can be planned alongside transport, schools and services rather than wherever a developer happens to buy land. Victoria's Big Housing Build used public land to speed up delivery of thousands of social and affordable homes.

Borrowing

Government can borrow more cheaply than any private developer and can take a 30 to 50-year view rather than chasing a short-term return.

Rent setting

As landlord, government can set rents based on cost and fairness, not on what the market will bear.

How it would stabilise rents

Public housing traditionally charges rent as a share of income, often about 25% for low-income households. A large stock of homes at fair, stable rents would give tens of thousands of families relief directly, and would ease pressure on private rents by adding supply and offering a real alternative.

Vienna is the example everyone cites, and for good reason. After a century of city-led building, around half of Vienna's residents live in municipal or subsidised housing with secure tenure and reasonable rents. It's consistently ranked one of the world's most liveable cities, and public housing there is sought after by middle-income families, not just those in need.

In Australia, the Greens proposed a national public housing developer in 2024 to build 610,000 homes over a decade, with rents capped at 25% of median household income. They estimated an average renter would save around $5,200 a year. That proposal hasn't been adopted, and the Greens lost most of their lower-house seats at the May 2025 election. Whatever you think of the party, the underlying idea is sound: when government owns the housing, affordability can be designed into the system.

Long-term leases would also give renters something the private market rarely does: security. No annual rent shock, no "we're selling" notice.

Quality you can rely on

This is the part I care most about as a builder.

When the owner plans to hold a building for 50 years, they have every reason to build it properly: good insulation, durable materials, low maintenance, solar and efficient appliances. Housing advocates want new social housing to be energy efficient, climate resilient and accessible, and those goals are easier to achieve when the owner is also the long-term landlord paying the power and maintenance bills.

Let's be honest. Everyone loves taking a shot at government for being slow and bureaucratic. But some of Australia's biggest private builders have turned out homes with so many defects that regulators have had to overhaul quality assurance just to protect buyers. Public projects are typically audited and scrutinised in ways many private developments aren't. I'd rather have a project that takes an extra six months than one that causes 30 years of maintenance headaches.

Government can also lead on construction methods. Modular and prefabricated building, where components are made in a factory and assembled on site, can deliver consistent quality faster, with less weather delay and waste. With the trade shortages we have, prefab is becoming more of a necessity than an option. A large, steady public program is exactly what a prefab industry needs to invest in factories.

And there's a flow-on effect. A well-built public rental sector raises the bar. Private landlords and developers would have to compete with it.

Jobs and a steadier building industry

Housing construction has strong flow-on effects across the economy. Every home built creates work for trades on site, and for manufacturing, transport, engineering and design.

A public building program would:

Smooth out the boom-and-bust cycle. When private building slows due to interest rate rises, public work can keep skilled trades employed instead of losing them from the industry.
Train apprentices, helping fix the trade shortage over time.
Spread work to the regions, especially if prefab components are made in regional factories.
Keep the benefit onshore, with local content and local workers.

Private builders would still build most of it under contract, the same way private contractors build public roads and hospitals. This isn't government versus the building industry. It's government giving the industry a steady pipeline of work.

How to pay for it

The obvious question is cost. There are proven ways to finance it:

Housing bonds. Through Housing Australia (formerly the National Housing Finance and Investment Corporation), government already raises money from investors with government-guaranteed social bonds and lends it to community housing providers. That model could be scaled up and the money used to build homes directly. Rent then services the debt over decades.
A public housing trust or REIT. Superannuation funds and other investors could invest in a government-backed vehicle that owns affordable rentals and pays a steady, modest return. It brings in private capital without giving up public control.
Budget and infrastructure funding. Treat housing like roads and rail: essential infrastructure. Funds like the Housing Australia Future Fund help, but the returns from a $10 billion fund won't deliver the scale needed on their own.

And don't forget the cost of doing nothing. We already spend billions every year on Commonwealth Rent Assistance, emergency accommodation and homelessness services, and lose productivity to housing stress. Investing in permanent homes reduces those costs, and the homes themselves remain public assets that grow in value.

Public build-to-rent versus private build-to-rent

Private build-to-rent (BTR) is growing fast, backed by super funds and global investors. It can add rental supply and offer longer leases, which is good. But it's still designed to deliver returns to shareholders, and where the owners are offshore, the rent leaves the country.

A government-led model keeps the housing, the rent and the value onshore. Rent goes back into maintaining and expanding the housing stock, not into dividends.

Fairness and stronger communities

Housing is the foundation for everything else. A family that isn't facing constant rent rises can plan their future. A nurse, teacher or tradie can afford to live near where they work. Older Australians and people with disability on fixed incomes can have security.

The mistakes of old "housing commission" estates are well known: concentrated disadvantage, poor design and poor maintenance. Modern public housing avoids them with mixed-tenure developments, where public, affordable and private homes sit side by side, with good design and proper ongoing maintenance funded through the rent model. Think townhouses and mid-rise apartments near transport and services, not isolated towers.

There's a generational fairness issue too. Younger Australians face housing costs their parents never did. A large public rental sector tells them they'll have somewhere decent to live without it eating all their income. For homeowners, that's reassuring rather than threatening: it's your kids and grandkids who benefit, and a more stable market is better for everyone than one that lurches between boom and bust.

We've done it before

This isn't untested. After the Second World War, Australian state housing commissions built tens of thousands of homes, creating whole suburbs for returning servicemen and working families. Around the world, Singapore houses close to 80% of its residents in government-built flats, and social housing makes up a large share of the market in Austria, the Netherlands and Scandinavia. New Zealand has also restarted large-scale state house building.

Common questions

Won't this hurt private builders and developers?

No. It targets the part of the market they don't supply, low-cost rentals, and most of the construction would be tendered to private builders. A steadier pipeline of public work helps the industry through downturns.

Who would live in these homes?

People on low incomes and others eligible for social housing first. At scale, it could also include affordable rentals for moderate-income workers, such as nurses, teachers, police and hospitality staff, who earn too much for social housing but struggle with private rents.

Social housing is public or community housing for people on low incomes, usually with rent set at about 25% of income. Affordable housing is a broader term for housing priced below market, often around 80% of market rent, for low to moderate-income households who don't qualify for social housing.

The bottom line

Australia's housing crisis won't be solved by tinkering at the edges. Government already has the land, the borrowing power and the planning levers to build homes at scale and keep them affordable for good. Done well, with proper design, quality construction and mixed communities, it would stabilise rents, keep the building industry working and give the next generation a fair go. We've done it before. It's time to do it again.

Why Government Should Be Australia’s Biggest Landlord: Solving the Housing Crisis

The problem: incentives haven't worked

Government's advantages: land, borrowing and planning