The 41 council flats at Helensburgh Rd, Wakari - more than half of them empty - have been bought by Harp, a newly formed Dunedin-based charitable trust, in a deal worth about $1.65 million, the Otago Daily Times has learned.
Harp - Housing at the Right Price - is a sister trust to the Pact Group, which provides community support to people with intellectual disabilities or recovering from mental illness, and will take over the flats in April.
Both organisations are headed by chief executive Louise Carr, of Dunedin, who could not be reached for comment yesterday.
Dunedin City Council city property manager Robert Clark said the money received would be returned to the council's community housing fund.
However, as part of the deal, the council had the option to buy two South Dunedin properties owned by Pact - the Pact office and neighbouring New Zealand Post shop in King Edward St - when required for the proposed South Dunedin library.
He said the deal was not a "swap", as the council would pay a fair market price when the purchase took place.
The council had decided to sell the 41 flats because it felt their low occupancy meant Harp could make better use of them, Mr Clark said.
The low occupancy was due in part to the requirement for tenants to be aged 55 or over, and meant the flats were costing the council between $50,000 and $80,000 a year, he said.
Helensburgh Rd tenants said they received letters confirming the sale yesterday, and were worried about the deal.
The tenants, who would not be named, feared the change of ownership could lead to rent increases that forced them out.
"Everybody is worried ... we thought once we were in these [flats], that would be it for the rest of our lives," one 63-year-old tenant said.
"It's very unsettling to think, at our age, we have got to worry now about `do we have a home to live in?"'Pact Otago director of operations Donald Shand said a meeting with tenants would be held soon, but there were no plans to raise rents.
"We haven't really considered the detail around that, but we will be taking the tenants on under the current arrangements. Any further arrangements will be made in conjunction with them. I'm sure rent won't be an issue for them."
The trust planned to use the vacant flats for Pact clients and others in need of community housing, without the council's eligibility restrictions, he said.
The purchase agreement meant the flats would remain part of Dunedin's social housing portfolio, he said.
"The key thing for us is to meet the social housing need in Dunedin," he said.
