Tenants seeking subsidy

Low-income tenants in council housing worry they will become homeless without access to a rental subsidy, and say the cost of emergency housing could be 11 times more expensive.

The income-related rental subsidy (IRRS) ensures tenants in social housing pay affordable rents by setting them at 25 per cent of income, with the Government topping up the rest.

The subsidy is available to tenants with Kāinga Ora, and new social housing tenants with community housing providers (CHPs). It is not, however, available to tenants in council housing.

Wellington City Council’s 3500 tenants instead pay 70 per cent of market rates, with the council discounting the rest. The council estimates that 1400 of them pay at least 35 per cent of their income towards rent. A solo mother, in one instance, was paying 86 per cent of her income on rent.

That double standard has been questioned by academics, economists, city councillors and even a Labour MP. Mayor Andy Foster previously called it ‘‘a discriminatory situation’’. And, last month, a group of council tenants launched IRRS 4 ALL, a campaign beseeching the Government to give them the subsidy.

Those same tenants have now calculated the potential cost if that doesn’t happen. They say the Government risks forking out $909 a week per client in emergency housing, based on the Government’s own reporting in Wellington during the last quarter.

Extending the IRRS to tenants in council housing would cost the Government a lot less – $79 a week per tenant.

IRRS 4 ALL spokesperson Liya Lupala knows what it’s like to be homeless. She first slept rough at age 15, and then couch-surfed when she returned to Wellington several years ago. The rent at her council flat was already unaffordable – roughly 60 per cent of her income – and increasing each year.

‘‘If you don’t factor us in, you’re going to be short at the other end. Because we’re going to be there [in emergency housing],’’ Lupala said. ‘‘You can’t solve the housing crisis by creating more homelessness.’’

Ministry of Social Development general manager housing Karen Hocking expressed caution over the campaign’s calculation. The number of ‘‘distinct clients’’ was a shorthand for the number of households who had been granted emergency housing grants, she said. ‘‘Household composition is based on the declared adults and children in each emergency housing application, and may not be reflective of actual family size.’’

Infometrics principal economist Brad Olsen didn’t doubt that emergency housing would be substantially more expensive than extending the subsidy.

‘‘The cost of emergency housing is enormous,’’ Olsen said.

The distinction between community housing providers (CHPs) and councils, as written in the policy, was hard to defend, he said. ‘‘[Wellington City Council] is essentially a community housing provider – the community being the city.’’

The Government had ‘‘stonewalled for years’’ over extending the subsidy, and it might be time for the council to explore alternatives.

The council, for its part, has been exploring other options. It has repeatedly acknowledged that its housing arm is financially unsustainable, and was currently forecast to become insolvent by June 2023.

The main alternative is to establish a CHP – most likely an independent community trust – to which the council would lease its housing stock, as Christchurch City Council did, and thereafter be able to access the subsidy. Except only new tenants would be eligible, a solution which the current tenant base has said isn’t acceptable as ‘‘nothing would change’’ for them.

In October, Foster established a Mayoral Taskforce, which would aim to solve the problem of unaffordable rents, and include tenants.

Councillors Jill Day and Fleur Fitzsimons also filed a Notice of Motion to pursue interim measures for tenants – such as a rent freeze and hardship fund. The council was due to discuss that notice at a meeting next Thursday.

Fitzsimons said the council would continue lobbying the Government to access the IRRS, but it would be ‘‘irresponsible not to explore other options’’.

Even so, access to the subsidy remained the preferred option. ‘‘I think it will change the lives of tenants overnight,’’ she said. It would also turn the council’s yearly $6m deficit into a $5m surplus – allowing the council to ‘‘build more houses’’.

Housing Minister Megan Woods said the council should consider funding its housing unit through rates. Ultimately, the council would ‘‘choose the rent it sets’’, Woods said. The Government had already provided $220m to support the council’s housing arm, through a Deed of Grant in 2007.