"The Government won't give us any grants or subsidies for pensioner housing. However, housing trusts can get money, so as a council we're behind the eight-ball when it comes to running pensioner housing nowadays."
Mr Ellis said because of the rental being charged for the units the council is never going to be able to keep up the standard and quality of pensioner housing.
"A housing trust will be able to take the properties into the future," he said.
However, Tim Delaney of Dannevirke Community Board warned whoever operates the social housing needs to be carefully monitored.
"It's really important that housing for the elderly is seen as a service, rather than just a job to be done," he said. "It's a vital service which needs a personal element from the operator."
Mr Ellis said many other councils have divested their social housing stock to trusts over the past few years.
Tararua District Council has debated for a long time on what to do with the pensioners' housing and in 2012 the council began exploring options to replace the aging Hovding Court units with new flats on the Dagmar St reserve. This proposal angered residents who vowed to fight to save their little piece of paradise, with more than 50 turning out to a street meeting at the time.
However, as the council began investigating the suitability of the site, it was found to be contaminated and the council was left looking for alternative options for the Hovding Court flats. Proposals to sell three of the double units (six flats) and move them off the Hovding Court site, to be replaced with six new flats built for about $600,000, failed to gain traction, as did plans to replace the remaining four older flats when the council's pensioner housing reserves built up again to avoid additional loans.
Now the council is planning to use its existing eight vacant flats to house tenants moved from the older flats in Hovding Court which no longer are up to standard for pensioner housing.
Tararua District Council has already sold its flats in Ormondville and Norsewood.