I dont think the Government can do much (that it will do well), but I think it needs to:
1) Curtail companies and LLCs from acquiring Single Family Residences (SFR).
2) Dramatically step up incentives for builders to increase quality control and build quality while increasing punishment severely for fraudsters.
In my opinion flipping, rentals, and "fixer uppers" have gotten out of control. I see the only way of curtailing this as penalizing those types of lenders in interest rates or taxes to push them out of the market. For those unaware, flippers seek out private money lenders aka hard money lenders and pursue crazy high interest rates that balloon after 3, 6, 9, or 12 months. The idea is by taking on loans while they flip properties they can take on risk/liability, but spread their assets out and purchase/flip more properties. It happens for almost all property types, but typically is done for SFR/MFR because commercial has a lot more risk since property prices are much higher. The quality of repairs and renovations these flippers typically perform is well known to be absolute god awful. Flippers make short term investment choices on home improvements needing long term solutions.
To my second point, I've heard of so much fraud from home builders it baffles me they aren't in prison. Full neighborhood developments where builder's sold 30 year roofing, but built roofs with materials known to fail in 10-15, and the building company dissolves into the wind leaving homeowners with little to no recourse other than some couple hundred dollar settlement check whenever some class action suit eventually settles. There are plenty more examples of things like this, but my point is I think the only win to have is promote tax incentives for builders to build using quality processes and pass inspections, but I will admit I'm chasing a solution and am ill equipped to be presenting a solution. I am more focused on calling out the problem.