The Finance Minister is hitting back at a group vehemently opposed to state housing sales.

A letter has been distributed to community groups from the State Housing Action Network, urging them not to buy state houses.

But Bill English says their fears that such groups can't afford to own social houses are unfounded.

He points to the number of people with mental illness and disabilities already housed by community groups.

"Owned by IHC, the Richmond Fellowship - all sorts of groups who've got years of experienced and are strong, sustainable organisations."

English says the tenants are the first priority in any sale.

"There's a very wide range of people in there and we believe that we should be treating them on an individual basis."