Housing NZ will change its processes to ensure it doesn't outbid private citizens who have already put down a deposit on a new home.
Andrew McKenzie, chief executive of Kāinga Ora - which includes Housing NZ and KiwiBuild - gave the assurance after he appeared before the Social Services and Community select committee in Parliament this morning.
He was speaking about a block of 44 apartments in Onehunga, seven of which had been pre-sold before the private developer decided to sell them all to Housing NZ.
He also defended Kāinga Ora's practice of providing clean homes to state house tenants who were in methamphetamine-contaminated homes, ahead of the 15,000-odd people on the Housing NZ waiting list.
The committee hearing was at times fiery as McKenzie and Kāinga Ora board member John Duncan faced a barrage of questions from National MPs Judith Collins and Simon O'Connor.
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Collins asked McKenzie about five homes in Howick, at a average cost of nearly $1 million, and seven $500,000 one-bedroom apartments in Onehunga that Housing NZ purchased after outbidding private buyers.
A women had made a 10 per cent deposit on one of the Onehunga apartments, Collins said.
"You people came along and bought the whole lot and she got gazumped."
McKenzie said that Housing NZ had added 1461 homes to the housing stock last year, but "occasionally we do have to buy houses off the market" to meet demand and to keep people in their communities.
"We cannot leave someone who lives in one of our homes homeless."
Housing NZ had bought about 340 homes last year.
He said that the Onehunga circumstances were "very unfortunate" for the woman who had put down a deposit.
He told reporters after the hearing that Housing NZ would change its processes to ensure it didn't happen again.
McKenzie added that homes bought by Housing NZ were a small proportion - 340 compared to 1461 last year - compared with the homes that were being built.
In answer to questions about methamphetamine contamination and anti-social behaviour, McKenzie said there were 33 state homes that were above the contamination level.
He said a "very small proportion" of state house tenants caused problems - but they were societal problems and it wasn't Housing NZ's job to put people in jail.
"We are not there as another form of police for people. We are there to provide homes for people."
Collins asked why state house tenants who had been in contaminated homes were being placed in clean ones ahead of the 15,000-odd people on the state house waiting list.
"Why are you doing that if they're just going to go and do it again? ... And you're putting these people at the front of the queue. If they're going to destroy the property, why not just leave them there?"
McKenzie: "If people are living in an unsafe home, we shift them to a home that is safe."
At that point, the discussion became heated and committee chair Gareth Hughes asked everyone to calm down.
"I'm very calm," Collins responded.
McKenzie and Duncan were also grilled on KiwiBuild, and Duncan assured the committee that they trying to better understand demand rather than "just chasing numbers".
Collins asked about the unsold KiwiBuild homes in Wanaka, and joked that they could be used as ski huts or even sold to foreign buyers.