The government now has the power to sell thousands of state homes to community housing groups.

Photo: RNZ / Alexander Robertson

The Social Housing Reform Bill was passed into law yesterday, clearing the way for Housing New Zealand to shed up to 8000 homes by next year.

The bill passed by 63 votes to 56, with National, the Maori Party, Act and United Future in favour and Labour, the Greens and New Zealand First against.

Labour's housing spokesperson Phil Twyford told the Parliament the new law was a charter for corruption.

"Paula Bennett stands here in the house defending a bill that will give her and Bill English, the deputy prime minister, absolute unfettered powers to do any deal they like with whomsoever they like on any terms and conditions," he said.

He said the legislation had given the government the power to "flog off billions of dollars' worth of land and housing" and not be bothered with "pesky public servants".

Green Party co-leader Metiria Turei said the people who needed help the most would no longer have any security about where they lived.

"Sixty thousand families are now essentially renting off two ministers."

She said there was no longer any obligation for the homes to stay for state housing purposes.

But Social Housing Minister Paula Bennett said the bill made sure there was a clear and transparent process in place to sell state houses.

"It's not something you do lightly, to give yourself the mandate to actually sell these houses, so we've made sure we've put the right checks and balances in place," she said.

She added that the bill did not change the first right of refusal that iwi may have over some Housing New Zealand homes.

Just over 1100 houses in Tauranga and another 370 in Invercargill will be first up for sale and the government has said there is plenty of interest in buying the homes.

But agencies including the Salvation Army and Habitat for Humanity, have already backed off - saying they lack the resources to take on such a large job.