IHC subsidiary Accessible Properties has beaten private sector bids to be the preferred provider of social housing stock in Tauranga.

Ministers Bill English and Paula Bennett announced the decision yesterday that Accessible Properties' bid to buy and manage 1,124 state homes in Tauranga was successful, and final negotiations were expected to wrap up by October.

If negotiations went well, Accessible Properties could take over ownership in the first half of next year.

Minister Responsible for Housing NZ Corporation Bill English said the status quo of one large state-run provider was not doing a good enough job supporting vulnerable people.

Community organisations would provide better housing services, he said.

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Social Housing Minister Paula Bennett said the transfer would not change tenants' eligibility for social housing and they would continue to be supported.

"Our bottom line remains that any properties transferred must remain as social housing and cannot be sold unless the Government agrees otherwise."

Accessible Housing competed against Hapori Connect Tauranga, a consortium led by British social housing manager Pinnacle Group, and the HRL Morrison & Co-led Kainga Community Housing Partners.

It had been managing social housing for 70 years and was the largest non-government social housing provider, with 1500 homes in New Zealand.

Accessible Properties general manager Andrew Wilson said they were "delighted" to have been chosen.

"We know what a difference good housing makes, and with the properties we already own we are proud to be able to make a difference and hear what it means for each tenant."

Tauranga local and Accessible Properties' Chair Paul Adams said he was very pleased with the outcome after nine months of hard work on the project.

He said the transfer of social housing was not the answer to Tauranga's homelessness problem on its own, but the provision of social housing would improve under Accessible Properties' guidance.

"Our intention is not only to extend the portfolio but reconfigure some of the properties already there so they are fit for purpose and appropriately sized for the needs of tenants," Mr Adams said.

Accessible Properties had the backing of Tauranga iwi after they signed a memorandum to support the bid in June.

Te Tuinga Whanau executive director and Ngati Ranginui board member Tommy Wilson said it was great for everyone in Tauranga Maoana not just the three iwi.

He said it was early days but a healthy relationship was being built between Accessible Properties and iwi.

"Paul Adams and his team are to be congratulated for taking the time to build bridges between Accessible and Iwi. This is a benchmark for others looking to developing the future face of Tauranga to follow," Mr Wilson said.

Phil Twyford, Labour's housing spokesperson, was critical of the decision.

He said the solution to Tauranga's "desperate housing shortage" was to build more houses.

Selling off the city's state houses would do nothing to house those living in cars and garages - it would not help Tauranga families find affordable rentals, he said.