Market rents squeeze pensioners

Cromwell pensioners Kath Gibson (86, left), Leo Reyntjes (68)  and Ivy Smith (91)  say they have...
Cromwell pensioners Kath Gibson (86, left), Leo Reyntjes (68) and Ivy Smith (91) say they have little disposable income after a rent jump on their council-owned flats. Photo: Jono Edwards.
Cromwell pensioners are struggling after the  rents  on their council-owned flats rose sharply, in a move a community law centre says "harms already vulnerable people".

From September 1, some residents in Central Otago Elderly Persons’ Housing were hit with a price jump as the Central Otago District Council removed a policy of not increasing rents by more than $6 a year.

The move,  affecting 42 out of 98 tenants, was made so the council could  charge market rent on the houses, and so prices paid by tenants could be balanced for similar units.

At  the higher end of the scale was Leo Reyntjes , who lives in a housing unit in Goodger St in Cromwell. His rent was raised by $25 per week  to $195 and would rise  by a further $5 next year, he said.

"We’ve been really hard hit. We’re paying 50% of our income on rent. We have no other income."

His Work and Income housing supplement had risen,  which helped slightly, but did not come close to paying the increase, he said.

His neighbour, Kath Gibson, who was hit by the same price increase, said she was concerned about any added expenses.

"I can’t buy anything extra. I’ve had extra bills to pay, which means paying big dollars."

She needed to have an operation, which she would struggle to pay for, she said.

Tim Cadogan visited her and her neighbours before he became Central Otago Mayor and listened to their concerns, she said.

"But he’s only one man, so he can only do so much. At least he listened to us."

Solicitor Angela Neugebauer, of Community Law Otago, sent a letter to the council on behalf of Mr Reyntjes. She said it argued charging market rent ignored the benefits  Elderly Persons’ Housing brought to the community and harmed already vulnerable people.

The decision to impose market rent was out of line with the approach taken by other councils, she said.

The council had not properly taken into account its policy on elderly persons’ housing or its current long-term plan, she said.

Council property and facilities manager Mike Kerr said the CODC had  long had a policy of charging market rents.

"Over time, where in some years market increases were greater than $6 per week, that resulted in some longer-term tenants paying less than new tenants, which was not considered fair, given no difference in units."

All councils differed on their operating standards and policies, and many operated on the basis they must at least break even, he said.

"To date,  the rent income from this council’s elderly persons’ housing portfolio has not covered its operating cost and so the shortfall has been subsidised by ratepayers."

The procedures in its policy on elderly persons’ housing were guidelines for staff processes and information to help  deal with new tenant applications, he said.

"It is not provided as part of a tenancy agreement. Additional to that is council policies and decisions on management, which over time councils review and amended.

"In this case the council removed the rent increase cap as part of the long-term plan adoption and the financial details in the plan are reflective of  the council change."

New Mayor Tim Cadogan said he had not had time to address the issue yet, but it was "definitely" still on his radar.

"I wasn’t happy at the time as an outsider, and now I’m on the inside."

He did not yet know what the solution would be, but it was "quite a process to even get it looked at".

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