The Government has put aside $52.2 million to fund its new plan to partner with private developers and build thousands of lower-cost homes on Crown-owned land in Auckland.
Around 500 hectares has been earmarked for development in areas zoned for residential housing in the city. The land is owned by education, defence and transport agencies and will not include public reserves.
In today's Budget, Housing and Building Minister Nick Smith said a capital contingency fund has been established for the policy, which aims to rapidly increase supply in Auckland's overheated market.
"This latest initiative will enable the Government to select vacant parcels of land from the relevant agency and make it available for development by a private sector partner through a competitive process," Dr Smith said.
The funding would be used to buy the land from the relevant agencies, and the costs would be recouped after it had been developed for housing.
Developers would not have to pay for the land up front, but would instead pay the Government back once the new houses had been sold. This would allow them to get on with supplying more houses as soon as possible.
Because the land was already zoned as residential, but had no existing buildings or tenants, houses could be brought to the market more quickly.
Dr Smith has estimated that between 4500 and 10,000 houses could be built on the land, depending on the size of the sections and the intensity of the developments.
The minister is meeting with developers next Friday to discuss the policy.
The next step was to identify the specific parcels of land for possible purchase. Dr Smith hoped to have an agreement signed for the first land parcel within six months.
He said this approach to housing had already proved successful in Christchurch, where a partnership with Fletcher Residential was expected to create 400 homes, some of them in an affordable range.
"We would be looking to achieve a similar result in any development agreement that is reached with this new fund. We are boosting not just supply, but the supply of affordable homes."
Further housing measures targeted at residential property speculators and foreign buyers were revealed earlier this week.
These included a new "bright line" test for residential property which meant capital gains from property would be taxed if sold within two years, exempting the family home.
All non-residents and New Zealanders buying and selling any property will have to provide an IRD number and their tax identification number from their home country.
Non-residents will also need a New Zealand bank account before they can get an IRD number.
Inland Revenue was given a further $29 million to make sure people were complying with property tax obligations.
The Government was also investigating a withholding tax for foreigners selling residential property, which could be introduced in mid-2016.