The KiwiBuild scheme was first announced as Labour Party policy in 2012 by then leader David Shearer. The policy survived as party policy under all his successors and was a prominent feature of Labour's 2014 election campaign. After the 2017 general election, the Sixth Labour Government of New Zealand took office. Finance MinisterGrant Robertson outlined a mini-budget on 14 December 2017 which allocated $2 billion of capital spending to KiwiBuild. Homes built under the programme are sold to first-home buyers and the cash is recycled into further housing developments. In mid-January 2019, Housing MinisterPhil Twyford acknowledged that the government would be able to build only 300 of the 1,000 KiwiBuild homes it had promised by 1 July 2019. That same month, it was reported that KiwiBuild's head Stephen Barclay had resigned following a dispute with Twyford over moving KiwiBuild from the Ministry of Business, Innovation and Employment to the new Ministry of Housing and Urban Development. Later reports claimed that Barclay had been the subject of complaints by staff over his leadership behaviour and treatment of others. In late January, Barclay filed a constructive dismissal case against HUD, claiming that the Ministry had breached his privacy. In August 2019 head of KiwiBuild Commercial Helen O'Sullivan also resigned causing further disruption. On 4 September 2019 a "reset" of the scheme was announced by new Housing Minister Megan Woods. Changes included the target of building 100,000 houses over 10 years being abandoned, the allocation of $400 million to support alternative home ownership schemes, those buying studios and one-bedrooms units only having to commit to one year of ownership opposed to three, the 10% deposit requirement for a First Home Grant lowered to 5%, groups of more than three can combine their $10,000 First Home Grants together for a single joint deposit, the amount developers receive after triggering the underwrite has been lowered. By September 2019, the scheme had produced only 258 homes, far below the set targets. Data also highlighted that the Kiwibuild houses were not attracting buyers, leading to the unsold houses being put onto the private market in some areas, costing the government over $8,000,000.
The scheme has attracted criticism around the income caps, with claims that they are too high for low-income buyers to be able to compete with those receiving higher incomes. Following the sale of the first Kiwibuild homes, then-Housing Minister Phil Twyford stated that the scheme was not targeted towards working poor and unemployed families, attracting criticism from aspiring home-owners and activists who argued that KiwiBuild will lead to increased speculation and gentrification. There are misunderstandings by the general public and the media about how the scheme works. One widespread belief is that the KiwiBuild houses are subsidised by the government when what really happens is that property developers sell to the government at what is likely the market rate and the government then sells the property to eligible buyers 'at cost'. Once the government is paid by the buyer, the money is then recycled back into the scheme. The developers sell the KiwiBuild houses to the government for no more than $650,000 for their houses in Auckland and Queenstown and $500,000 for houses in all other areas. The developers appear to be achieving these price cap restrictions by building basic small houses on small lots of land at prices not much cheaper than their other houses that are not part of the KiwiBuild scheme.
