A first-home buyer has been left disappointed after Housing New Zealand, now called Kāinga Ora, bought out the apartment development she was purchasing a unit in.

The woman, who did not want to be identified, signed an agreement to buy a one-bedroom apartment in the Onehunga Bay Terrace Development, being built by Avanda.

She paid a 10 per cent deposit, of $54,200, at the start of August last year.

JASON DORDAY/STUFF Kāinga Ora confirmed it had bought all the units in the development.

But in November she was told by real estate agents selling the development that the developer had entered into a conditional agreement with Kāinga Ora for it to buy the unsold units in the development.

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She said she was told if that happened she would be given the chance to cancel. She said she requested more information through her lawyer but was told there was no requirement to tell her anything further.

On January 16, she was sent a deed of cancellation by the developer, cancelling her agreement. She was told she would get her deposit back, plus the expenses she incurred in the deal, such as legal fees and the cost of a valuation.

SCREENSHOT An artist's impression of the finished development.

"Since receiving the initial email to notify me about the potential purchase by HNZ I have felt totally powerless. I had been dreaming of evenings spent at my new home with my friends and family and planning in great detail how I'd decorate my first home.

"I understand there were people that had bought in the development that had planned for these homes to be their 'forever home' and can only imagine how heartbreaking this process has been for them - I had purchased a one bed apartment so felt more of a starter home for me, although a beautiful one at that, the first time I went through the apartment I cried that I'd be able to live somewhere so nice.

"At any point had I cancelled this agreement I would have lost my deposit. I understand there are risks associated with buying property and especially off the plans but I don't understand how we have developers that can act in such bad faith yet are totally within the property act, and I as a purchaser am powerless."

She said she did not challenge the deed of cancellation but it seemed that the options were to agree or to move in to what was essentially a state housing development.

​Kāinga Ora confirmed it had bought all the units in the development.

"Purchasers all purchased these properties in good faith and the developers have pursued an agreement with HNZ which they knew would have a considerable impact on those that had purchased property.," the buyer said. "Our money was good enough for Avanda until they found a better offer."

She said the whole process had been difficult and stressful and her money had been tied up for seven months.

Avanda has been contacted for comment.

Lawyer Thomas Biss said the developer should not have been able to cancel a contract unilaterally unless there was a specific clause that allowed them to do so.

"But developers often do have all sorts of clauses in their agreements."