The Ministry of Social Development is planning to buy a 17-unit motel near Blenheim and convert it for emergency housing.
Brydan Accommodation in Springlands, which has a swimming pool and hydrotherapy spa pool, is currently advertised as premium accommodation.
The ministry wants to use it to help homeless people move on to permanent, affordable housing.
Ministry spokesperson Scott Gallacher said the ministry was looking at Brydan Accommodation because it was in a good location, close to local amenities, and was already built in a way that made it ideal for supporting families.
He said the sale price was commercially sensitive and could not be provided until after any sale was concluded.
Marlborough District Council chief executive Mark Wheeler said some people were unhappy about the plan, and resource consent was needed.
"It's different to visitor accommodation in that people tend to be at the premises for longer, more families involved, they're there for longer term, so it's classified differently in our resource management plan to visitor accommodation which is the current use."
Marlborough District Council said it had received a resource consent application.