Minister for Social Housing Paula Bennett expects institutions like banks will invest in state houses being sold by the Government, Radio New Zealand reports.
Prime Minister John Key said yesterday the Government intended to sell 1000 to 2000 of the country's 69,000 state houses in the next year to private social housing providers.
Bennett acknowledged that many of those providers were charitable trusts which may not be able to afford the houses, but she expected they will find partners to help meet the cost.
“In some respects you've got a guaranteed income because of the income-related rents and that is what is making a fundamental difference,” she told Morning Report.
“It's quite a different discussion with partners that might be able to provide equity if you're able to give a guarantee of rent.”
Opposition parties are describing the Government's social housing plan as chaotic and likely to further drive up rents while delivering nothing for those who need it.
Labour leader Andrew Little said the plan would just put further pressure on an already overheated private rental market.
“The hidden story in all of this - this is about the National Government looking after their private developer mates and putting pressure on the rental market and pushing rents up.”
He said it was very disappointing Mr Key did not reveal this policy before being re-elected last year.