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28. 5. 97
SUPPLEMENTARY REPORT BY THE
CHAIRMAN OF THE COMMUNITY SERVICES COMMITTEE
12. PUBLIC RENTAL HOUSING - RENTAL INCREASES 1997 RR 5275
| Officer responsible |
Author |
| Property Manager |
Property Manager, Rob Dally |
| Corporate Plan Output: 8.7.2 |
INTRODUCTION
The purpose of this report is to provide additional information outlining the likely impact on tenants, of the proposed rental increases for the Council's 398 public rental housing units, as reported to the May 1997 Community Services Committee.
BACKGROUND
During the 1996 review of affordable housing, the Housing Sub-committee met with the Minister of Housing, the Honourable Murray McCully, in order to present a case for the Christchurch City Council to administer the "Accommodation Supplement" for those qualifying tenants of Council housing.
The rationale for this was to provide a cost effective and tenant friendly mechanism to access central Government housing subsidy funds which can be reinvested in affordable housing in Christchurch (meeting social needs whilst creating economic activity) without significantly affecting tenants through rental increases. A net weekly increase of $3 to $5 for those with minimal assets was set as a yardstick for EPH tenants during the Council's housing review.
The Minister declined to accept the Council's offer and the "Accommodation Supplement" will continue to be administered by the Income Support Division of the Department of Social Welfare.
THE ACCOMMODATION SUPPLEMENT
It is important to background how this Central Government Housing subsidy works before we look at scenarios as they affect Council public rental housing.
The "Accommodation Supplement" was introduced in 1993 when Housing New Zealand increased its housing rentals to "market" rates and made available a variable benefit for those who qualified, essentially through low income/assets. The primary target was probably the unemployed or those on other forms of benefit (eg sickness, DPB) and those on National Superannuation. The secondary target was probably those on low wages and particularly those families with young children.
The "Accommodation Supplement" provides a cash grant (to those qualifying) of 70% of the rent paid above set thresholds. It should be noted that the supplement is also available to those boarding or paying mortgages.
The entry thresholds are 25% of net income for those renting or boarding and 30% of net income for those paying mortgages with minimum thresholds and maximum accommodation supplement (A.S.) available as follows, effective from 1 July 1997.
As the accommodation supplement increases from 65% to 70% of the rent payable above the threshold, the effect of increased rents will be mitigated for tenants eligible for the accommodation supplement.
| Unemployment & Training Benefit: Without
Children |
Threshold |
Maximum A.S. |
| Single 16-17 years (TB only) |
$37.00 |
$65.00 |
| Single 18-24 years |
$37.00 |
$65.00 |
| Single 25 years and over |
$37.00 |
$65.00 |
| Married couple |
$61.00 |
$75.00 |
| Unemployment & Training Benefit: With
Children |
||
| Single (1 child) |
$63.00 |
$75.00 |
| Single (2 children or more) |
$68.00 |
$100.00 |
| Married couple (1 child) |
$77.00 |
$100.00 |
| Married couple (2 + children) |
$77.00 |
$100.00 |
| Independent Youth Benefit |
||
| Single 16-17 year olds |
$37.00 |
$65.00 |
| Job Search Allowance |
||
| Single 16-17 year olds |
$37.00 |
$65.00 |
| Sickness: Without Children |
||
| Single 16-17 years |
$38.00 |
$65.00 |
| Single 18-24 years |
$38.00 |
$65.00 |
| Single 25 years and over |
$38.00 |
$65.00 |
| Married couple |
$69.00 |
$75.00 |
| Sickness: With Children |
||
| Single (1 child) |
$64.00 |
$75.00 |
| Single (2 + children) |
$69.00 |
$100.00 |
| Married couple (1 child) |
$81.00 |
$100.00 |
| Married couple (2 + children) |
$80.00 |
$100.00 |
| IB & TRB: Without Children |
||
| Single 16-17 years |
*$46.00 |
$65.00 |
| Single 18 years and over |
*$46.00 |
$65.00 |
| Married couple |
*$76.00 |
$75.00 |
| IB & TRB: With Children |
||
| Single (1 child) |
*$72.00 |
$75.00 |
| Single (2 + children) |
*$76.00 |
$100.00 |
| Married couple (1 child) |
*$88.00 |
$100.00 |
| Married couple (2 + children) |
*$87.00 |
$100.00 |
| * Non Beneficiary |
| Widows Benefit & DPB |
||
| Woman alone/single adult |
$38.00 |
$65.00 |
| Sole parent (1 child) |
$64.00 |
$75.00 |
| Sole parent (2 + children) |
$69.00 |
$100.00 |
| Domiciliary Care DPB |
||
| Single 16-17 years |
$46.00 |
$65.00 |
| Single 18 years and over |
$46.00 |
$65.00 |
| Sole parent (1 child) |
$71.00 |
$75.00 |
| Sole parent (2 + children) |
$76.00 |
$100.00 |
| NZS & Veterans Pension |
||
| Single Living Alone |
$52.00 |
$65.00 |
| Single Sharing |
$48.00 |
$65.00 |
| Married Person |
$80.00 |
$75.00 |
| Married couple both qualify |
$80.00 |
$75.00 |
| NQS included, post 1/10/91 |
$77.00 |
$75.00 |
| NQS included, post 1/10/91 |
$80.00 |
$75.00 |
The income a person receives and any money held in a bank account or elsewhere may affect the rate of "Accommodation Supplement" that person is entitled to receive, as follows:
CASH ASSETS
| Single: A single person can have up to $2,700 before
the rate of "Accommodation Supplement" is
effected. Between $2,700 to $8,100 the rate of
Accommodation Supplement payable reduces. There is no
entitlement if cash assets exceed $8,000. |
| Couples: A couple can have up to $5,400 before the
rate of Accommodation Supplement is affected. Between
$5,400 to $16,200 the rate of Accommodation Supplement
payable reduces. There is no entitlement if cash assets
exceed $16,200. |
SOME EXAMPLES
A single unemployed person over 25 years on a net weekly unemployment benefit of $146.13 and cash assets under $2,700 is entitled to a maximum rent subsidy of 70% (up to $65) for any rent over the threshold of $37.
Example - Brougham Village 1 bedroom unit.
| Now |
July 1997 |
||
| Rent |
$80 |
$85 |
|
| Threshold |
$37 |
$37 |
|
| Accommodation Supplement applied to |
$43 |
$48 |
|
| @ 65% = |
$27.95 |
@ 70% = |
$33.60 |
| Net rent payable |
$52.05 |
$51.40 |
|
| Difference |
- $0.65 pw |
This means that if the rent is raised by $5 pw, a tenant in the above circumstances would pay 65 cents less per week under the new accommodation supplement.
A married couple on a sickness benefit of $276.78 net per week and cash assets under $2,700 are entitled to a maximum rent subsidy of 70% (up to $75) for any rent over the threshold of $69.
Example - Norman Kirk Courts/Airdale Courts one bedroom unit.
| Now |
July 1997 |
||
| Rent |
$80 |
$90 |
|
| Threshold |
$69 |
$69 |
|
| Accommodation Supplement applied to |
$11 |
$21 |
|
| @ 65% = |
$7.15 |
@ 70% = |
$14.70 |
| Net rent payable |
$72.85 |
$75.30 |
|
| Difference |
+ $2.45pw |
A single working person earning say $240 net per week is entitled to an accommodation supplement of 70% of rent over 25% of their net income up to a maximum of $65 pw provided cash assets are under $2,700.
Example - Harman Courts one bedroom unit.
| Now |
July 1997 |
||
| Rent |
$87 |
$95 |
|
| Threshold |
$60 |
$60 |
|
| Accommodation Supplement applied to |
$27 |
$35 |
|
| @ 65% = |
$17.55 |
@ 70% = |
$24.50 |
| Net rent payable |
$69.45 |
$70.50 |
|
| Difference |
+ $1.05pw |
SUMMARY
It is very difficult to develop scenarios such as the above examples for each real life tenant, given the multitude of income/assets permutations available.
What is important in the consideration of any rental increases, is that Council housing is for those with limited income/assets.
The Council has not adopted strict criteria of eligibility for housing. Instead it has been Council policy for officers to accept applications generally in accordance with approved guidelines.
This has meant that housing has been offered to those with a housing need, especially those with limited income/assets, the majority of whom are on some form of Government benefit, and/or have a special need(s) including disability One of the action points arising from the 1996 housing review is the development of new EPH tenancy criteria (policy) and it is intended that this process will flow through to public rental housing.
The Council has for many years held its public rental housing rents at the low end of the "market", subject to independent valuation and those rentals recommended in the report reflect a continuation of that "policy".
As noted in the report, rents for public rental units have not been increased since 1992 whilst "market" rents have risen significantly, particularly since the introduction of the Accommodation Supplement.
Since the 1996 housing review when the concept of attracting additional revenue through the Accommodation Supplement was first mooted, the thresholds have risen slightly (up to $1) in line with increased levels of benefit payments whilst the level of subsidy increases from 65% to 70% effective 1 July 1997.
The Council has always aimed at housing those with limited income/assets and it is recommended that this policy continue. If income/assets exceed the Accommodation Supplement limits available and the Accommodation Supplement abates fully as a result, it could be suggested that those tenants may not meet the spirit of the Council's objectives of housing those with limited income/assets. The "Accommodation Supplement" is the "leveller" between those on low income/asset levels and those with slightly higher income/asset levels.
One of the difficulties in implementing a rent increase as painlessly as possible is in ensuring that tenants are aware of and understand their entitlements in terms of the Accommodation Supplement (and other assistance) and how to go about tapping into it.
Chairman's
Recommendation: That the information be received and that all tenants be informed of the procedures for application for the accommodation supplement at the time of the rent increase.
CONSIDERED THIS 28TH DAY OF MAY 1997
MAYOR