One of the country's largest social housing projects is set to be taken over by an Australian housing group after New Zealand providers failed to make the shortlist.
Tamaki Housing Association manages nearly 2800 former Housing New Zealand homes in east Auckland.
When it called for tenders to take over the tenancy management business earlier this year, 11 Australian and New Zealand housing providers pitched.
Two Australian groups have been short listed, Compass Housing Services and Horizon Housing, and no New Zealand companies have made the cut.
But the Tamaki Regeneration Company said none of the New Zealand housing groups were large enough for the project.
Scott Figenshow is the chief executive of Community Housing Aotearoa, which represents most local housing providers.
Mr Figenshow said the group was dismayed by the decision and questioned where the commitment was to growing the country's community housing sector.
"We've also got some longer standing providers in Emerge Aotearoa and New Zealand Housing Foundation, that have been doing the hard yards in this space for a very long period of time, and have also done all the things asked of them around stepping up and working at larger scale."
"So we thought it was a surprise to see that neither of them were also included," he told Checkpoint.
Mr Figenshow said the tendering processes in the social housing sector needed to be rooted in genuine community development.
"We need to be mindful that ownership and governance does matter," he said.
Tamaki Regeneration Company chief executive John Holyoake told Checkpoint that it invited anyone who was interested to apply.
He said the decision came down to the size and capacity of the companies - Compass currently ran over 4000 houses and Horizon ran 2500 houses.
"We've got 2800 properties - that's not a small organisation that we're asking someone to work with us on."
Mr Holyoake said there was still opportunity for local housing providers to be involved in Tamaki.
"What we're doing through this process is really encouraging the two that are shortlisted to think about how they partner with those New Zealand organisations that can bring that New Zealand uniqueness...so we can even more value added to what we're trying to acheive," he said.