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Mr Lambert bought the land from the Dunedin City Council in 2015, with the intention of establishing a five-unit affordable housing development.
After a lengthy consultation process with the council, which Mr Lambert said cost him over $100,000, construction has started on the two flats.
He was hoping to be able to add two more units in the future.
It had been a frustrating process, he said.
"It breaks my heart that I'm jumping through hoops to provide affordable housing while every time I turn on the TV people are crying out for it."
Mr Lambert said he would not pass the extra costs of construction on to his future tenants, and said "the market dictates rent".
He hoped the buildings would be completed by September.
- Gus Patterson