She had applied to Housing NZ a number of times to be transferred to another house.
"She really suffered the last few months, the house was just so mouldy. It's in the walls and the whole building. With her condition, she shouldn't have been in there."
After Ms Waikato died, Mr Harwood said he and his daughter were told by a Housing NZ representative they had "21 days to move out".
"[Housing NZ] didn't show much compassion. When my partner passed away, I was now classed as a single man and I didn't meet the criteria."
Mr Harwood and his daughter, who have now been transferred to different state housing, had wanted to stay in the Campbell St house, because they enjoyed living in the neighbourhood. "It's actually a good area, there are some good people there. There are some clowns, like anywhere in Hastings, but we had nice neighbours."
However, he said a Housing NZ staff member told him "you can't stay in the house just the two of you," adding: "If you take over the house, we're not going to fix it up."
Tukituki Labour Party spokeswoman Anna Lorck said since Mr Harwood and his daughter had moved out, the house had undergone renovations. It had been given new curtains, carpet and a new bathroom.
A Housing NZ spokeswoman told Hawke's Bay Today last night the corporation would look into Mr Harwood's claims and respond on Monday.
State housing proved a contentious issue during last year's general election, with Labour accusing Housing New Zealand of raising its eligibility criteria and selling off assets en masse, while National maintained the corporation was focused on refurbishing and relocating existing stock to meet demand.
Hawke's Bay Today's story about the house in Tuesday's edition sparked an outcry from readers, with some comments suggesting social housing applicants who decline house offers should then "go to the bottom" of the waiting list.
A Ministry of Social Development spokesman later confirmed applicants who decline housing can be removed from the waiting list if they don't have "a good reason" for doing so, but he was unable to comment specifically on the Campbell St house.