In this paper, I analyse the post-war development of social rental housing in Norway. During the 20th century, Norwegian municipalities created some of the more means-tested and market-oriented social housing sectors in Europe. Given developmentsin other countries in recent decades, the Norwegian case is therefore highly relevant to the general debate on the residualisation of social housing in Europe. Using the case of Oslo as the main point of departure, I discuss key challenges of residual and market-oriented social rental housing. Drawing on city council debates, local government reports, and previous studies, I argue that the logic of extreme meanstesting creates policy dilemmas connected to contradictory policy goals.