Hauraki elderly housing tenants face rent increases

The council’s 57 elderly persons housing units were developed in Paeroa, Waihī and Ngatea between 1960 and 1985.

Tenants in nearly 60 Hauraki District Council-owned residential properties are set to get rent increases in September.

In a report to be tabled at a council meeting on Wednesday, council property manager Kim Donnelly said the rising cost of repairs and maintenance required an increase in rents to maintain the current condition of the 57 units.

It was recommended that a $10 weekly increase to the current rents be approved.

The elderly persons housing units were developed in Paeroa, Waihī and Ngatea between 1960 and 1985.

Building condition grading had shown the units were in a well-maintained condition with an operational maintenance and renewal programme in place, to maintain them to the layout and standard as they were, Donnelly said.

Current rental rates were set at $198 for a studio unit or bedsit and $205 for a one-bedroom unit, per week.

Work and Income subsidies covered up to a maximum of $80 per week for eligible tenants, while in reality, WINZ had subsidised tenants with an average of $52 per week, Donelly said in the report.

A rental increase of $18 per unit was approved in May 2023.

That increase was largely based on the introduction of Separately Used or Inhabited Parts (SUIPs) in July 2023 which had pushed property rates to income ratio, up to 26%.

Donelly said that increase did not fully address the shortfall and the 2023/24 financial year saw a $61,000 deficit in net operating costs.

As it was a financially ring-fenced funded activity, the operational, maintenance and renewal costs could only be funded from rentals income.

Current rental income did not cover the cost of SUIPs and the ring-fenced, non-rated, income only funding model did not anticipate the added cost burden.

Donelly said the continuing cost of living crisis would have an impact on current and future tenants’ ability to pay an increased rental.

The proposed $10 rent increase would increase operational maintenance buying power by $24,843 annually.

Annual income with a 6% vacancy and $10 weekly rent increase equated to $598,441.

Operational Expenses (including SUIPs) were estimated at $346,048 while capital expenditures (CAPEX) were estimated at $210,000, leaving $42,393 for overheads.

Three options had been presented for consideration: Retain the status quo; increase weekly rental by $10; increase weekly rental by $21 to fully compensate for the cost of SUIPs.

Retaining the status quo would leave the budgeted income remaining at $569,200, with a projected deficit of $62,500 for SUIPs in the 2024/25 year.

The preferred option of a $10 rent increase would see tenants burdened with a further $40 per month and did not fully address the annual shortfall of $ 62,200 created by the introduction of SUIPs.

A proposed weekly rent increase of $21 would cover SUIPs but not address an increase in the cost of repairs and maintenance.

That option would likely result in the creation of bad debt when tenants could not afford to pay the increased rental and would further exacerbate the portfolio financial limitations.

Al Williams has worked in daily and community titles in New Zealand and overseas. Most recently he was the deputy editor of Cook Islands News.