Housing Minister Phil Twyford said this week the Ministry for Housing and Urban Development had bought five of the first 10 completed KiwiBuild houses at Northlake ''in accordance with the terms of the contract'' - an underwriting arrangement with the developer.
One has since been sold.
In September last year, Mr Twyford announced 211 KiwiBuild houses for Northlake over the following two years.
Ms Collins said yesterday ''even more concerning'' than the Goverment's purchase of the five houses was that it had ''signed a binding underwrite guarantee for more than 200 extra KiwiBuild houses at the same development''.
This, she said, was ''likely to turn into the Government having to buy those houses, too.
''If the developer ... is not able to find eligible buyers, then the Government has little chance of being able to sell the properties at the prices asked.
''The only way through is for the Government to drop the prices asked and to remove the KiwiBuild eligibility requirements.''
Ms Collins predicted a financial loss for the Government.
''The developer receives the price that the Government has guaranteed him.
''KiwiBuild is now a property developer welfare scheme.''
A spokesman for KiwiBuild said the underwriting arrangement allowed the developer to build ''knowing that they will be able to realise their investment and recycle that capital back into building more affordable homes''.
The two- and three-bedroom KiwiBuild houses have been offered to eligible buyers at between $565,000 to $645,000.
An Official Information Act request by the Otago Daily Times to the Ministry of Housing and Urban Development for documents supporting those values was declined this week on the grounds they contained ''commercially sensitive information''.
Last month, Northlake applied to the Queenstown Lakes District Council for land use consent for 175 new KiwiBuild lots, developer Chris Meehan saying a further 26 would also be in the development somewhere.
