Housing has been a serious problem since independence. Nearly 85,000 houses (about 70% of the nation's entire housing stock) were destroyed by the Indonesian military in September 1999. Though UNTAET and a number of international aid organizations responded quickly with temporary shelter kits, rebuilding of permanent housing has been slow and property ownership disputes have not been fully addressed.
Tens of thousands of residents fled the country during the violence and those who remained sought shelter in abandoned homes. As property owners returned to their homes, many found occupants claiming ownership and unwilling to leave. Some occupants have demanded large payments from the owners for "house-sitting" or "improvements" made to the homes in the owner's absence. Through a proposed Land and Property Commission, it has been generally recognized that the original owners or tenants of a property have the right to eventual restitution and reoccupancy, but administration and enforcement of such rights has been a low priority as the government struggles to rebuild an entire nation and care for the emergency needs of its people.
As of 2003, it was difficult to estimate housing demand. Besides the vast number of those within the country who have been left homeless and/or with inadequate shelter and facilities, there were (as of the close of 2002) about 28,000 East Timorese refugees waiting to return from the West Timor territory and about 1,300 in Australia.
In urban areas such as Dili, Bacau, and Alieu, homes have been typically built from concrete. A majority of the population lives in rural areas with homes made from bamboo, wood, and thatch.