Born in Hastings, Hay was the only son of Scottish immigrant William Hay and Elsie Major, who had married three years previously. In 1930, Hay left school at standard six to steady fenceposts for a judge at Kohukohu, who taught the young man accountancy during the evenings. In 1933, Hay relocated to Auckland and obtained a job at the KDV Morningside box factory. In 1938, he tried to start his own caravan business, but later found that he was more talented at home building.
In 1942, Hay married Enid Paris in Mount Eden, having joined the New Zealand Army Service Corps in 1941. Although he was initially involved in the Mount Eden branch of the New Zealand Labour Party, he unsuccessfully stood as candidate for breakaway Labour MP John A. Lee and his Democratic Labour Party at the 1943 New Zealand general election.
During his time at the Army Service Corps, Hay pioneered a number of innovative home building and relocation procedures, and these were to stand him in good stead in civilian life when he started Keith Hay homes in 1949. In 1953, he moved his company to Mount Roskill.
At the same time as he relocated his company to Mount Roskill, Hay entered local body politics in that semi-rural borough, becoming first a borough councillor (1950) and then Mayor of Roskill Borough (1953-1974). As Mayor, he sold council plant, contracted out services and constructed amenities. After his retirement as Roskill Mayor, Hay was then elected to the Auckland Regional Council, and also served on the Auckland International Airport Committee. As a civic leader, he was honoured with an OBE in 1966, and a CBE in 1977.
In 1969, Hay helped to organise a nationwide New Zealand Billy Graham Crusade. 1972, he was a principal organiser for the Marches for Jesus that year, which involved an estimated 70,000 people. He then became involved in bitter controversy when he opposed passage of New Zealand's Homosexual Law Reform Act 1986, and earned the enmity of New Zealand's lesbian and gay communities. He established the Coalition of Concerned Citizens along with Sir Peter Tait in 1986, but that organisation failed to achieve its objective of curtailing passage of that legislation. Thereafter, Hay became more reticent, retiring from local body politics and devoting himself to civic charity work.
In 1997, Hay died at Auckland Public Hospital, aged seventy-nine. His son, David Hay, later became Auckland City Deputy Mayor under Mayor Les Mills, and was also noted for his opposition to the gay pride movement, attacking Auckland's lesbian and gay Hero Parade in the mid-nineties. Today, David Hay's former home houses the Maxim Institute's office.
There is a park and sports field area in Mt Roskill named after him.