Council says tenants better off elsewhere
The country’s second-biggest landlord, Wellington City Council, says its tenants are better off renting from someone else.
It’s a stunning admission from the council, which has 3500 lowincome tenants across a portfolio of 1931 properties, while more than 500 people are on its wait list.
But the reasons were clear: cheaper rents, better living conditions, shorter wait times. Wellington Mayor Andy Foster said the government was simply better equipped than the council’s troubled housing unit.
‘‘When someone says: ‘I need a house, I need social housing accommodation’, they come to the city council, or they come to the government. At the moment, city council housing is markedly more expensive. And that’s only going to get worse, in comparison to the government housing.’’
It all came down to which social housing providers could access an income-related rental subsidy (IRRS). Ka¯ inga Ora, and 90 community housing providers (CHPs) across the country, can. Local councils, however, cannot.
Access to the subsidy meant tenants paid only 25 per cent of their income, with the government topping up the difference between that and market rent. By comparison, Wellington City Council’s tenants paid 70 per cent of market rent, with the council discounting the rest.
The council estimated about 85 per cent of its tenants – almost 3000 people – would be eligible for the IRRS, based on their incomes, and would therefore pay less rent under the scheme.
Debbie Port is one of those tenants, living in a rundown one-bedroom apartment and paying $199.50 a week in rent. That was almost 60 per cent of her income; $336.65 a week from a supported living payment. If she could access the IRRS, her rent would instead be $84.
That $115 difference was reduced by an $84 accommodation supplement. Even so, she would be $31 better off each week.
‘‘The Government talk about wanting to fix the housing crisis . . . that means granting the IRRS to council housing tenants,’’ Port said.
And while the council’s own rent review found tenants were paying more rent than they could afford, it would be raising the rents for 90 per cent of them
anyway. For Port, that would mean an increase of $20 a week from September 6. The increase would effectively wipe out her recent $20 benefit increase.
‘‘Any difference that would’ve made is gone. The council’s taken it. If I wanted to invest in a mobility scooter, I can forget that.’’
The council, however, said the increases were just a coincidence. It adjusted rents each year based on its assessment of market rates, capping those increases at $20 for single people, and $30 for other households. This latest assessment was conducted before the Budget announcement.
Besides, it couldn’t afford to discount rents further, nor keep them the same. The council was already facing a $403 million shortfall for upgrades over the next 10 years, as well as being buried beneath annual operating deficits that were set to reach almost $50m by 2031.
Council housing had always been funded on a rates-neutral basis, but even changing that wouldn’t help.
‘‘The effect, if we were to operate even as we are at the moment, would be a roughly 60 per cent increase in rates over the next nine years,’’ Foster said.
Access to the IRRS would mean the council operated at a yearly $5m surplus, rather than a yearly $6m deficit, he said. The system was rigged against the council, with the answer ‘‘in the hands of the Government’’.
But Housing Minister Megan Woods said diverting IRRS funding to council tenants would result in fewer people in the public housing programme. Any decision to change the policy would need to be ‘‘carefully weighed’’.
‘‘Because council tenants are already adequately housed, they do not fit the criteria for accessing IRRS,’’ she said.