This policy review article focuses on the transition of the public housing policies in Japan, particularly the policies regarding elderly low‐income residents. The population of Japan has aged to the point at which the elderly outnumber the residents under 15 years old, and this has presented new challenges for public housing. The changes in policy have been influenced by the aging population, and public housing is being adapted for elderly residents. The concentrations of poverty in public housing, which arguably have been exacerbated by the “Adaptability and Benefit Principle” and its rent calculation system introduced in the 1990s, remain to be resolved. Many disadvantaged elderly individuals are at risk of losing their homes, and it is necessary that the governmental entities in Japan proactively provide subsidies to property owners for the support and housing of elderly low‐income households. Osaka City is used as an example of the problems and potential solutions involved in the public housing of disadvantaged elderly.