Pensioners could face rent hikes of almost $100 per week under an Ashburton District Council proposal.
The council currently charges 55 per cent of market rate for some of its 102 elderly persons housing units, but is looking at increasing it to an 80 per cent minimum.
This would mean rent increases from $4 to $96, depending on whether residents could access government accommodation support.
The elderly person housing units are situated in six complexes in Ashburton, Methven, and Rakaia.
In 2021, the council began staged rental increases of $10 per year, aiming for the service to eventually operate without ratepayer top-ups.
The council set the rent for 16 newly rebuilt units at Friendship Lane in Ashburton at 80 per cent of market rate after a review in 2024. This was required as part of the funding agreement with the Ministry of Housing and Urban Development, which partially funded the rebuilds.
The review found the rental increases across the other units were unlikely to reach the intended point of self-sustainability.
A strategic review earlier this year, found the units were still not financially sustainable under the current funding model and identified an ageing housing portfolio, with nearly $500,000 in deferred maintenance.
The existing rental income will cover 98 per cent of operating costs this year.
However, it is projected by 2027/28 —when rentals are expected to become self-sustaining — the forecast income will only cover 88 per cent of the expenditure, leaving an annual deficit of $109,455.
With the housing reserve currently overdrawn by $47,920, any ongoing annual shortfall will need to be funded through general rates unless the funding model is changed.
The proposed rent increases to 80 per cent of the market rate would help fund maintenance and renewals, with most new tenants expected to qualify for government accommodation assistance.
The council estimated weekly increases ranged from $48-$96 for tenants who do not qualify for government assistance, to $4-$30 per week for tenants who are eligible.
Council will consult the public on the policy changes, with any new rentsetting framework likely to be from July 2027.
Other proposed changes to the policy include more flexible tenant eligibility criteria and updated pet rules to align with tenancy law.
The units are available to rent for low-income residents age 65 and over with limited access to safe and affordable housing. They were not considered social housing.
The draft Elderly Persons Housing policy consultation will run from June 25 to July 26.
