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Area manager tenancy services Kate Milton said until May last year, the corporation did not provide curtains with their houses, so there were many tenants without them.
Late last year, the Dunedin Curtain Bank had a big surplus of thermal drapes and had offered to put them in Housing New Zealand's houses, she said.
Dunedin Curtain Bank chairwoman Virginia Driver said thermal drapes were ''better than double glazing'' when it came to preventing heat loss.
She had come across many people using whatever they could as curtains with sheets or blankets quite common.
Mrs Driver said Housing New Zealand's clients were ''our customers too'' and they had offered to fit thermal curtains for those who needed them.
Their stocks of curtains had dwindled considerably since Housing New Zealand began promoting the service to its 1451 Dunedin tenants late last year.
''We have 119 houses on the waiting list at the moment. We will need more curtains,'' Mrs Driver said.
The curtain bank receives a lot of its second-hand curtains from builders and interior designers, as well as donations from the general public.
Volunteers would also sew linings on to existing curtains. Ms Milton said Housing New Zealand had been working on improving the warmth of state homes since 2001.
In that time, ceiling and underfloor insulation had been installed in almost all of the 1451 Dunedin state houses, with only one still to be done.
She said the standard for new properties and those being refurbished had changed in May last year and now included thermal drapes.