Housing New Zealand has been warned it will run out of money by February – and has no money for developments and maintenance past 2017.
That is the warning from both Treasury and Housing New Zealand to its minister, Bill English, 1 NEWS can reveal.
Mr English has admitted he will have to give HNZ more money, but how much that is, and when that will be is unknown.
It comes after the Government told HNZ it wouldn't be asking for a dividend for the next two years.
Labour MP Phil Twyford says the Government has deliberately run the corporation down and that it is now on the brink of insolvency.
But Mr English, asked if HNZ will 'go broke', said: "No, that is not the case."
Official Information Act Documents show that in July, Treasury noted HNZ had capital constraints and no decision had been made on ramping up development activity.
Another document says HNZ is going to run out of money by February 2017 and the dividend won't be enough to make up the difference.
HNZ says the state house sale process has put it under further financial constraints.
It has asked the Government to look at a totally new funding model because it doesn't receive capital gains like other landlords.
But even in November last year, Treasury warned the Government that it was not realistic for HNZ to undertake large scale redevelopment without additional capital.
Mr English says HNZ will also make more money from the sale of surplus Crown land and "surplus" houses that it builds on sites like the Northcote development.
The Government plans to open up two more parcels of crown land for HNZ developments by the end of the year.
Mr English says Auckland’s Unitary Plan will allow for 30,000 houses to be built in the next 5-10 years.
"Housing New Zealand are getting on to building lots of houses. It means they won't have any spare cash," he said.
"We'll just have to work with them about how the new builds are going to be financed."
* An earlier version of this story said Housing New Zealand would be broke by February. 1 NEWS accepts this is not the case. The Minister for Housing New Zealand, Bill English, says the Government will ensure HNZ has enough capital to build new social housing and to redevelop its existing properties.