It is intended that the rent received covers the costs associated with running the housing. However, a backlog of maintenance has been funded from reserves (savings) and there is still more to do. Unfortunately, the reserves will be fully depleted within four years at current rates of expenditure.
In July 2020, we amended our Revenue and Financing Policy to allow funding to come from the general rate to cover the shortfall, and we have included this in our 10 year budget accordingly. We have also undertaken a comprehensive review of the service and we now have a plan for the way forward. We want to get the service back to being self-sustaining.
To do this, we are proposing increasing rents by up to $20, to $110/week for a single unit and $130/week for a double unit from 1 August 2021.
Every year after there would be a $10 increase until they reach $170 per week for a single unit and $190 per week for a double unit. We are aiming for these rental prices as we estimate they will enable our Elderly Persons Housing activity to fund itself.
Within 2 years, the activity should be self-sustaining, and there should be no further need for support from the general rate. We are, however, suggesting that in two years’ time another review is undertaken to ensure we have achieved this. During this review we will also consider the ongoing future of our portfolio, for example, such as whether another community housing provider would be more suitable to manage the portfolio.
We see the rental increase as affordable. Our rents are currently $20-100 below other providers of similar type housing.
In addition, some residents may be able to access higher accommodation supplements from central government as the rent increases. Effectively, the increase that some residents see will only be a small proportion of the actual increase.
The maximum of $170 per week for a single unit and $190 per week for a double unit is based off an internationally adopted standard for defining affordability. This standard states that residents should spend no more than 30% of their gross house hold income on housing costs . Some single residents choose to live in double units, therefore they may pay more than 30% of their income on rent.