Kiwibuild misled first home buyers about the completion date of an apartment complex in Wellington, according to the property developer.
The Monark project has been repeatedly delayed but Kiwibuild buyers trying to get out are being charged thousands of dollars to break their contracts.
It is leaving some without a home and significantly out of pocket after trusting the Government.
The 44 Apartments in Monark are available for KiwiBuild buyers with the project being balloted out because of its popularity.
“We'd almost won Lotto in buying into a government backed housing scheme,” said one buyer.
But the project has been hit by repeated delays with work yet to start and the latest completion date of June 2022.
“Whilst this continues we have to keep paying rent and we miss out on the opportunity cost of having our money which is sitting in a trust account,” said a buyer who wanted to remain anonymous.
But the developer says the delay goes with the territory.
“These things happen, it's a normal part of construction that you get delays,” Monark developer Ian Cassels said.
But KiwiBuild told buyers the homes, priced from $450,000 would be ready by July this year.
The developer disagrees.
“We have never said to our buyers that the homes would be ready by July this year,” Mr Cassels said.
“The Wellington company want a large percentage of our deposit to cover costs that they have apparently accrued through not developing or building this project and that just doesn't sit well,” the disappointed buyer said.
“We have to charge something - we can't just have people coming and going on a house building contract for half a million dollars,” Mr Cassels said.
The National Party says Monark Kiwibuild buyers have been misled by the Government.
“I’m calling on the minister to step up and take responsibility get them their money back and say sorry for the mess she's created,” Nicola Willis, the National Party's housing and urban development spokesperson, said.
Government Ministers talked up the Monark development with no warning that projects like this can be a risky proposition for first home buyers because they're often beset by delays.
Housing Minister Megan Woods says she's sympathetic and wants more information about the penalty fees.
“It was marketed as an opportunity for first home buyers to get ahead - not to set first home buyers back,” said the buyer.