The Salvation Army today turned down buying state houses off the Government, making opposition parties say the sell-off will now only benefit property developers.
One such property developer is Accessible Properties - an offshoot of IHC which owns 1,000 homes and is now the largest non-Government housing provider in the county.
And it wants to get larger by purchasing 1,000 state homes.
"We'd like to get on and into negotiations with the Government. This will be good for New Zealand," says Accessible Properties Chairman Paul Adams.
While the IHC's happy to invest in National's social housing experiment, another big name which National touted to promote the policy isn't - the Salvation Army.
"We just do not have the personnel skills, the management skills and the economic clout to make it happen," says housing spokesperson Major Campbell Roberts said.
Labour leader Andrew Little says the Salvation Army pulling out from buying the state houses "is a huge smack in the face for the Government".
But Housing Minister Bill English says: "We have just done a round of public consultation and there is plenty of interest around the country."
There's scepticism about the policy which could see up to 8,000 state houses sold to community groups by 2017.
Without the Salvation Army on board, the job of winning over the sceptics just got a lot harder.
"It's going to need a different approach and I think that most probably instead of individual organisations it's going to need more of a consortium approach to make it work properly," says Mr Roberts.
Labour fears that means opening the door to private property developers.
"This was always about a significant transfer to those private interests it's not about doing what's best for state housing tenants," says Mr Little.
But Mr English says: "We are looking for expertise in property, but the most important bit is getting better outcomes for tenants."