The situation of residential Kebele houses, which make up 44.4% of the total residentialrnhousing stocks in Addis Ababa is worthy of study in the present context of a globalrnhousing policy of moving away from public housing to embrace a more market orientedrnhousing sector. It is particularly important since this trend is also influencing the housingrnpolicy of Ethiopia in the country's period of transition to a more market orientedrneconomy.rnKebele houses represent the largest proportion of public housing in the country at largernand in Addis Ababa in particular, housing substantial number of urban households. ThernKebele houses suffer from poor public administration and neglect which led to therndeteriorating condition of the housing stocks. The houses also occupy large centralrnplaces in the city, producing a negative city image.rnThis study has tried to asses the condition of the housing units and the situation of tenantrnhouseholds in selected two Kebeles of Addis Ababa; one located in 'Abnet' area andrnanother in 'Kuwas Meda' area. The study has tried to asses the risks of lack ofrnintervention and continuation of the current public tenure system on one hand and risksrnassociated with inteiference on the other hand. Both of the Kebeles selected in the studyrnare located adjoining the Mercato area. The Kebeles show similar characteristics inrneconomic activities, occupation and livelihood strategy of tenant households.rnThe findings of the study in the two Kebeles show that Kebele houses are found inrncongested situation, with poor quality service and physical infrastructure provision andrnpoor physical condition. But, unlike predictions of previous studies on Kebele houses, thernhouses are not falling apart getting beyond repair and turning out of use. The houses arernkept standing by long term upgrading and individual maintenance efforts of tenantrnhouseholds.rnThe Kebele houses in the study areas have given shelter to the most vulnerable and poorrnurban households. Most Kebele house tenants in the study area depend on the double usernof a residential Kebele house, and the location advantage it provides them with itsrnproximity to central and market areas to earn their lively-hood.rnIn addition, the findings show a mere transfer of tenure to sitting tenants throughrnprivatization is not likely to result in improvement of the condition of Kebele housesrnunless the dwellers are financially supported to undertake housing improvement andrnunless the problem of congestion is relieved.rnFinally, the study has tried to indicate the severity of social cost that will be involved inrngovernment intervention and risks associated with continuation current public system ofrntenure