A federal government proposal to offer tax breaks to lure foreign housing investors has become stranded in the Senate, with the Coalition and the Greens both declaring it will "do nothing" to improve housing affordability.

The two parties used a Senate committee report tabled on Wednesday to confirm they opposed Labor's bill, which seeks to cut company tax for "build-to-rent" apartment complexes.

It leaves the bill with no clear pathway to become law, the second Labor housing policy to suffer that fate after the Help To Buy scheme, which has been stuck since February.

Build-to-rent complexes (BTR) are designed for long-term leases rather than private sales and are typically developed and operated by corporations. They feature prominently in the US, the UK and Germany, but only 11 such developments exist in Australia.

The bill would let eligible BTR developers claim a larger tax deduction for the cost of capital works and pay a lower rate of withholding tax.

To be eligible, developments would need to remain BTR for 15 years and would need to ensure one in every 10 apartments is "affordable", defined as a 25 per cent discount on the other nine apartments (assuming they are of similar size).

Property developers and affordability advocates voice concerns

But the Senate committee heard concerns both from property developers, who warned the tax benefit was too minor and too complicated to obtain to be worthwhile, and from housing experts who disputed the suggestion that apartments would be "affordable."

The BTR complexes that already exist in Australia are mostly luxury apartments that offer amenities such as pools, gyms and co-working spaces in exchange for a hefty premium.

One example, operated by Mirvac in Sydney's Olympic Park, offers one-bedroom apartments beginning at $745 a week, well beyond the reach of someone on a typical income even with a discount applied.

Affordable housing advocate Karl Fitzgerald told the committee that international evidence suggested the designated affordable units would either be "dog boxes" with "second entrances for the poor people", or else not genuinely affordable.

A joint submission from the Property Council, the Community Housing Industry Association and National Shelter said the government should make the tax benefit larger and change the affordability definition to cap rent at 30 per cent of the income of low-income earners.

Independent senator David Pocock indicated he would support the bill if those changes were made, citing Property Council modelling that it could contribute 105,000 additional homes over a decade.

Coalition, Greens indicate little room to move

But the Coalition said it was totally opposed, in comments authored by assistant housing spokesperson Andrew Bragg, who called it a "thinly veiled attempt to corporatise the Australian housing market" and a "rent forever" policy.

Senator Bragg has campaigned against the prospect of superannuation funds investing in BTR, although Treasury officials told the committee the policy was mostly targeted at foreign investors and was less attractive to domestic investors, who could already access similar tax concessions.

The Greens said they would support the bill if Labor agreed to several Greens policies it has already ruled out, including enacting a national rent freeze, establishing a government-owned property developer and reforming negative gearing.

They also suggested the scheme be redesigned to ensure 100 per cent of apartments be "genuinely affordable", with capped rents and minimum energy efficiency standards.

The Greens warned the scheme risked an affordability "cliff" after the 15-year period for the policy expired, similar to what has been seen this year with the unwinding of a Rudd government affordable rental subsidy scheme, which has seen nearly 7,000 affordable properties come off the market.

Shortly after taking on the housing portfolio, minister Clare O'Neil said the BTR bill would make an important contribution to addressing the acute shortage of rentals and the government remained committed to passing it.

A Labor source told the ABC the government was open to considering sensible amendments. But the sources added it was not a silver bullet to address supply woes, and the government was considering ways to address other barriers to housing supply including migration settings and stagnant productivity in the construction sector.