Advocacy group State Housing Action Incorporated has lost its legal bid to stop the sale of 1124 state houses in Tauranga.

State Housing Action Incorporated filed papers in the High Court at Wellington seeking a judicial review of the sale to community provider Accessible Properties, arguing the decision to do so was "an unreasonable exercise" of statutory powers by the Ministers of Finance and Housing.

It also alleged selling social housing to the private sector would result in less social housing overall, and would lead to the displacement of current tenants and a poorer service for vulnerable people.

However, in his judicial review ruling, Justice Simon France said he found no basis to say that either minister breached their statutory powers in regards to the sale. He said policy was for the minister, not the courts.

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State Housing Action national convener John Minto said the group was disappointed with the decision.

"We don't want the court to overturn a parliamentary decision, but we do want the court to hold the government to account for the legislative objectives the government set itself, which will not be met through the sale of state houses."

Mr Minto said the group was consulting its lawyer on the possibility of an appeal, but they would not have a decision on this immediately.

Outside court yesterday, Accessible Properties chairman Paul Adams said he was delighted about the outcome of the court case.

"Accessible Properties is looking forward to moving on to the next stage of the process of taking over the state housing portfolio in Tauranga, and providing an enhanced service to its tenants," he said.

A spokesperson for the Government's Social Housing Reform Programme said now that the judicial review process had been successfully concluded, the Government expected to sign a contract with Accessible Properties Limited shortly.

The spokesperson said the organisation would then become the new landlord for the Housing New Zealand properties and tenancies in Tauranga from April 1 next year. Until then, Housing New Zealand would continue to be the landlord.

In making his ruling, Justice France considered evidence filed by Mr Minto, Tauranga branch convener Vanessa Kururangi, and two other witnesses described as giving expert evidence.

He said, in his view, much of the evidence was opinion-based from people not qualified as experts, or it could not be proved.

Justice France said the ministers had no obligation to have or read actual contracts, and for the plaintiff argument on that point was "not tenable".

"The [Housing Corporation] Act does not require the ministers to believe the transaction would immediately solve or improve Tauranga's social housing situation. But, rather, they must assess whether the transaction is for the purposes of the statutory objectives."

Those objectives included diversification of ownership and that the supply of housing would over time be increased, and he was satisfied the ministers had fulfilled those obligations.