Caveats on the properties prevents the council selling them.

The plan to gift the 13 houses and units comes after councillors had deemed the properties "surplus to requirements". The council then received expressions of interest from six housing agencies for the properties.

Under the plan, it could mean some of the properties are redeveloped to construct multiple dwellings, providing even more housing for those who need it the most.

The city's rental crisis has hit those on lower incomes the hardest with rents in the city skyrocketing in recent months to a median of $435 a week - that's $75 more than at the start of the COVID-19 pandemic 17 months ago.

The council's chief executive officer Peter Schneider said the 13 community houses - worth about $4 million - were of enormous value to the community and had provided safe and secure accommodation for many low income families and individuals over more than three decades.

Mr Schneider said the houses were a joint initiative between the council and state government which started in 1985 with the council providing the land and the government paying for the development and construction of the homes.

He said the arrangement between the two parties allowed for the transfer of the properties but not their sale.

The houses and units are located in Henry, Granter, Landmann streets, Merrivale and Vickers drives and McKiernan Road.

The high cost of subsidising the program prompted a decision of council last year to declare the 13 residential properties surplus to requirements.

The council, in conjunction with Housing Victoria, sought tenders for the properties and after six submissions selected the Salvation Army as the most appropriate.

"Council is seeking community feedback on the proposal and no final decision by council has been made at this time," Mr Schneider said.

"Having the properties managed by a registered housing provider would provide a better outcome for tenants and ratepayers with a dedicated housing provider able to provide additional social support services if required."

Mayor Vicki Jellie said community housing wasn't the council's core business and it was appropriate for it to pass the properties on to an agency that could and would look after them well.

She said the council had worked with Housing Victoria to ensure the transition was smooth and beneficial to the community.

Cr Ben Blain said it was the start of a really exciting process between the council and Housing Victoria.

"Putting out these properties for consultation is a part of the process which we hope will deliver better community housing outcomes across the municipality for some of our most disadvantaged residents," he said.

Cr Debbie Arnott said it was a great opportunity for the council to show how it was trying hard to support the most disadvantaged in our community.

Cr Otha Akoch said he supported transferring the properties over to a specialised agency which could take care of them better.

Cr Angie Paspaliaris also backed transferring the houses to an organisation or group which she said could do it better or more efficiently and effectively.

She said it was an opportunity for the council to have had a look at its service provision and see if there was an ability for it to improve in someone else's hands.

A report to the council in December said the housing program had become increasingly problematic for council to deliver due to budget constraints, and increased repairs and maintenance costs to the ageing properties.

It said the council was only a niche provider of housing and was detached from other state government wrap around services tenants might require.

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