Council decides on nil rent increase for social housing units

There will be no rent increase for Christchurch City Council social housing tenants this year.

Today’s Council meeting adopted the staff proposal for a nil rent increase for social housing units for the coming year.

Mayor Bob Parker says that City Housing tenants have been impacted by earthquake damage with many living in complexes which require repair and the Council staff recommendation recognised these concerns. The repair programme, which is not yet finalised, is subject to Earthquake Commission (EQC) and insurance settlements.

“This is a good decision for our social housing tenants, many of whom are already under financial pressure and living in complexes below the Council’s normal standards,” he says.

Background information

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).

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 recommended 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.