628 council housing tenants in Wellington missing out on rent subsidy

City Housing, the council's social housing arm, is in financial trouble and forecast to be insolvent by June 2023. Photo / Mark Mitchell

A new report has found 628 Wellington City Council housing tenants could be missing out on an affordable rent subsidy the council currently offers.

City Housing, the council's social housing arm, is in financial trouble and forecast to be insolvent by June 2023. It has 1927 properties and 3200 tenants.

Wellington City Council is lobbying the Government to give its tenants access to the Income Related Rent Subsidy, which means those on low incomes wouldn't pay any more than 25 per cent of their income on rent.

Gaining access to that subsidy would also turn City Housing's operating deficit into a surplus.

But last month, councillors Jill Day and Fleur Fitzsimons filed a Notice of Motion outlining a plan to make an immediate difference to the lives of tenants while negotiations over long-term solutions were ongoing.

One of the proposals was about ensuring all eligible tenants benefited from the council's existing Affordable Rent Limit (ARL) subsidy, which is for tenants paying more than 35 per cent of their incomes on rent.

Council officials have reported back on the Notice of Motion, finding about 670 tenancies would likely be eligible for the subsidy, but just 42 of those were actually receiving it.

Although, officials noted it wasn't possible to determine the exact number of eligible tenants.

Fitzsimons said those numbers showed the policy wasn't working.

"I don't think that it has been promoted to tenants as extensively as it needs to be and hopefully that will change after councillors make a decision on this Notice of Motion."

Wellington City councillor Fleur Fitzsimons. Photo / Mark Mitchell

Officials have suggested City Housing could run a communications campaign with tenants to ensure they were aware of the subsidy and were provided the necessary support if they chose to apply.

They said it was important the ARL remained an application-based process so that tenants could decide themselves whether to apply given it may impact on their eligibility for the Accommodation Supplement or the amount they receive.

It's estimated that if all 670 tenants applied, the cost of extending the subsidy would be $822,000 per year.

Officials said this could be funded in two ways- either by adding the cost to the existing City Housing deficit or with rates funding.

If it was funded through rates, this would add about 0.2 per cent to rates in the 2022/23 year. However, the current policy for City Housing is that it is not funded at all through rates.

Fitzsimons said it was sensible to add the cost to the existing deficit, particularly in light of the fact the council has for many years been charging City Housing rates.

"This is a humane and interim step the council could take to improve the lives of tenants.

"But at the end of the day, City Housing has got significant financial problems and this is one small step to make the lives of tenants better. It doesn't take away from the fact we need to address major financial problems facing City Housing."

The Notice of Motion also proposed a rent freeze for tenants and the establishment of a new hardship fund.

Given City Housing's financial woes, council officials said it was better to offer targeted financial support to tenants most in need through access to the existing council subsidy rather than a blanket rents freeze.

They noted the ARL already existed and would be easier and faster to roll out, rather than establishing a new hardship fund.

Fitzsimons said the council needed to look at a range of options available to make the lives of tenants better, which included a rents freeze.

"That really gives tenants breathing space while the council investigates the options to solve the bigger financial sustainability problems with City Housing."

The Notice of Motion will be considered by councillors at a Social, Cultural and Economic Committee meeting on Thursday.