Nil social housing rent increase proposed

Christchurch City Council staff are proposing that there is no increase this year in its social housing rents.

The Council has provided rental accommodation for people in real need of affordable housing since 1938 and is now the second largest social housing landlord in the country (second only to Housing New Zealand).

While some of its City Housing units are unoccupied due to extensive earthquake damage, 2264 units are occupied (there were 2649 available units prior to the earthquake events).  Most of the occupied units have some earthquake damage and some tenants are living in complexes below the Council’s normal standards.

When considering annual City Housing unit rent increases, Council staff use a cost of consumption model to assess financial sustainability.  This model estimates the asset life and the maintenance required to maintain the asset at a reasonable level throughout its life. Earthquake events have significantly changed the assumptions in the cost of consumption model as many assets will now need earlier replacement and/or refurbishment.

Council staff therefore recommend that the scheduled increase is deferred for a year until the cost of consumption model has been reworked and the financial implications are better understood.  It is highly likely that the reworked model will give a changed picture of funding requirements.

Mayor Bob Parker says that City Housing tenants have been impacted by earthquake damage with many living in complexes which require repair and this proposal recognises this concern. The repair programme is subject to Earthquake Commission (EQC) and insurance settlements which are not yet finalised.

“In light of so much work in progress it is impossible to set a rent increase based on this uncertainty.  This is a difficult process and it is appropriate that the Council staff recommendation is erring on the side of caution,” he says.

Next week Councillors will consider a report, recommending that City Housing rentals remain at the current rates for a further year.  While this recommendation will result in a loss of rental revenue, Council staff consider that this is the most appropriate action.