The Wellington City Council wants to become the biggest landlord in the capital in an attempt to making housing more affordable.
The Council has committed to building 750 new homes over the next decade.
At the moment there are over 300 people on the waitlist for council housing.
Mayor Justin Lester said they needed a new approach to social and affordable housing so the city doesn't end up like Auckland.
"This is the first time in the country's recent history that a local government entity will be investing in new social and affordable housing, and we're very proud to do that here in Wellington," he said.
Lester said the money has already been ring fenced and won't require any additional rates investment.
He said the ring fenced model relates to rental income and money received from central government.
Deputy Mayor and Housing Portfolio Leader Paul Eagle said the feedback they're getting is people want more social and affordable housing so there's an immediate opportunity to make a difference.
"Wellingtonians want us to do something different with housing, and we're lucky we retained our social housing stock, which meant we have the land to do something with."