Many Council tenants will pay lower rents under proposed rent change

5 March 2020

Wellington City Councillors will be asked to approve public consultation on a proposed fairer system for charging City Housing tenants rent, so those on lower incomes have more to spend on other basic living costs.

If approved, the change will see about 52% of Council tenants paying less rent.

Consultation, if approved, will start in mid-March and will run for four weeks, as part of a draft Social Housing Policy. Councillors meet on Thursday 12 March to consider the proposals.

The proposals also remove the requirement for tenants to leave their home within 12 months if their income exceeds the limit for being housed by the Council. Instead, all factors will be considered including their health, wellbeing and links to the community. The proposals also increase the limit of cash assets tenants can hold, so they can save a realistic deposit for their own home.

The proposals for rent-setting are the biggest change in the City Council’s draft Social Housing Policy. Right now, most Council tenants get a 30% discount on what they would pay if they rented their home on the open market. This takes no account of their household income or other circumstances.

Under the proposal, Council tenants on lower incomes will receive a discount of up to 40% of market rent depending on their household income. Tenants who receive a Jobseeker benefit or similar will benefit most. Some tenants on higher incomes will pay higher rent than they do now, depending on their circumstances. Most will still pay less rent than they would if they rented their home on the open market.

Councillor Fleur Fitzsimons, who holds the Council’s Housing portfolio, says: ‘The current rent-setting system causes hardship to some of our lowest-income tenants because it does not take account of their income and other circumstances. We would like to hear people’s views on the proposed changes that will benefit the majority of our tenants and leave them with more money to spend on life’s other essentials.”

Mayor Andy Foster says: “Council tenants are not currently eligible for the Income Related Rent Subsidy that Kāinga Ora and Community Housing Providers tenants receive to make rents more affordable and the housing sustainable. Councils continue to actively advocate to the Government to address this inequity.”

Mayor Foster adds: “The Council is committed to providing warm, dry social housing to those who face barriers in the housing market. City Housing currently receives no government-subsidised rent discounts, and our current rental income is insufficient to keep our housing services sustainable. Changing how we charge rent will help to make sure we can continue to provide a good standard of social housing and support to our tenants for the foreseeable future.”

As well as being fairer, the proposed rent-setting system will generate an additional $1.5 million in rental income for City Housing, helping to ensure the future of the service. Income from City Housing is not used for any other purpose other than to keep the service running.

The Council proposes to discontinue some rent discounts that cost City Housing about $520,000 a year and which will no longer be required under a fairer rent-setting system. These include:

• Rental caps, which limit annual rent increases. It’s proposed to remove these immediately if the new rent-setting system is approved, because tenants will pay a fair rent based on their income and circumstances.

• Affordable rent limit, which provides short-term relief for tenants in temporary hardship. Under the new system, tenants’ rents will be adjusted if their circumstances change.

• Rent freeze for tenants over 80. All tenants will pay a fair rent based on their income, so it is proposed to remove this rent freeze.