The National Party has hit out at Housing Minister Phil Twyford for including homes that had already been built in his KiwiBuild figures.
National's Judith Collins says that houses in the Huapai development in north-west Auckland were already roofed and clad in September last year - two months before Mr Twyford signed the government underwrite.
The planned Huapai development is part of an agreement with developer Mike Greer Homes to build 104 KiwiBuild homes around the country.
The underwrite initiative effectively eliminates risk for developers, guaranteeing the government will foot the bill for any losses incurred over unsold properties.
The scheme has been touted as a way of encouraging developers to build affordable houses that otherwise might not have been built.
But in Parliament on Thursday, Ms Collins questioned how the KiwiBuild underwrite could be said to increase supply when some of the houses in Huapai were already clad and roofed in September.
Mr Twyford said the developer had been negotiating with the government's Kiwibuild unit for several months, during which time construction commenced.
"As he [Mike Greer] said, the KiwiBuild underwrite allowed him to build a larger development with more affordable homes. It reduced his financing costs, enabled him to reduce his margin and build more affordable homes," Mr Twyford said.
"That is why the KiwiBuild homes are at a lower price than the other homes in the development."
Ms Collins then asked whether Mr Twyford had told Finance Minister Grant Robertson that construction was already well underway two months before he asked him to sign the underwrite.
Mr Twyford replied: "I did not directly inform the Minister of Finance, but the Minister of Finance is familiar with that project because he signed off all the documents relating to it."
In January, the government was forced to ditch its interim KiwiBuild targets after Mr Twyford conceded it would fall far short of its goal of having 1000 KiwiBuild houses built by July.