Wellington City Council wants to launch into negotiations with central government to get access to a key rent subsidy to solve financial woes with its City Housing portfolio.
File photo of Wellington city. Photo: 123rf
The council is the country's largest provider of council housing, managing nearly 2000 units with over 3000 residents, but management of the housing is far more expensive than what the council makes through rent.
The operating deficit was forecast to reach $50 million by 2030.
Meanwhile, the capital programme over the next 10 years - which would make the units comply with Healthy Homes standards - was estimated to be just shy of $450m.
In a meeting today, councillors agreed the mayor would write to the minister of housing and the minister of finance to request access to the Income Related Rent Subsidy.
The subsidy is a rent top-up for public housing tenants (in homes run by Community Housing Providers or Kāinga Ora), but is not available for council housing tenants.
Councils across the country are finding it increasingly difficult to manage their housing stock while keeping it cost efficient.
If it was given access to the subsidy the council would be able to charge market rates for rent and make its housing stock more financially sustainable.
The rent subsidy also makes the cost of living more affordable for tenants.
Those eligible for the subsidy have their rent capped at 25 percent of their income, whereas nearly all council tenants pay rent at a much higher proportion.
It is estimated about 80 percent of council tenants would be eligible for the subsidy if councils were given access to it.
The negotiations with the government would also re-examine the Deed of Grant signed between the Crown and the council.
Under the terms of the deed, the Crown committed to spending $220m to upgrade the first half of the housing stock, while the council would upgrade the second half at a cost of $180m.
The first half was completed in 2018, and cost an additional $69.5 million which was paid for by the council.
However, estimates for the second half of the upgrade have now escalated to to $286 million.
The deed also obliged the council to remain a social housing provider until at least 2037.
The mayor's letter will request the deed be amended.
Meanwhile, councillors also watered down a directive which would see the council begin to establish a brand new Community Housing Provider (CHP).
Council officers will now begin compiling a report into the establishment of a CHP, as well as how feasible it would be for tenants to be able to access the subsidy immediately.
