Pensioners could face rent hikes of almost $100 per week under an Ashburton District Council proposal.

The council currently charges 55% of the market rate for some of its 102 elderly persons housing units, but is looking at increasing it to an 80% minimum.

This would mean rent increases from $4 to $96, depending on whether the residents could access Government accommodation support.

The elderly person housing units are situated in six complexes spread throughout Ashburton, Methven, and Rakaia in Canterbury.

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% of the 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 are 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% of the operating costs this year.

However, it is projected that by 2027/28 – when the rentals are expected to become self-sustaining – the forecast income will only cover 88% 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% of the market rate would help fund maintenance and renewals, with most new tenants expected to qualify for government accommodation assistance.

The council estimated the weekly increases range from $48-$96 for tenants who don’t qualify for government assistance, to $4-$30 per week for tenants who are eligible.

The council will consult the public on the policy changes, with any new rent-setting framework likely to take effect from July 2027.

Other proposed changes to the policy include more flexible tenant eligibility criteria and updated pet rules to align with tenancy law.

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