Council’s community housing units provide an affordable housing option for elderly and other vulnerable persons. This supports Council’s Living and Working Strategy and promotes opportunities for keeping people in the district.
A key expectation is that units are typically offered at below-market rental in order to remain affordable, and that all costs are covered by rental income. However, demand for these units has been increasing recently and we expect this to continue as the population ages.
Demand for an additional 25 to 40 units is likely to be necessary over the next 10 years based on a projection of the current age demographic.
Council must strike a balance between ongoing maintenance, cost-effective renewal options, and the availability of additional funding sources beyond rental incomes to ensure the provision of quality and affordable housing for the community.
What can we do?
This would be achieved through a housing renewal programme targeted to maintain affordability and would include a budget of $400k per annum for renewal and upgrade works. This would be funded each year as a loan.
This option would target critical maintenance needs together with updating units when they become vacant, with a view that all units would be updated over 10 years.
However, this would result in some housing stock being of lower standard rather than good. Increasing demand would mean waiting lists will grow. Inflation will be a risk to affordability.
This option requires increased rents and higher rentals for newly constructed units. It would include a basic maintenance program, together with building new units at a cost of between $1.6M build cost (Option 2a - 10 new units) and $2.4M build cost (Option 2b - 15 new units).
This would prolong the life of units and improve quality of housing for tenants. It addresses some of the additional demand.
Inflation will be a risk to deliverability. Only 50% of demand for more housing will be met with this supply. This means waiting lists will remain and are still likely to grow.
What does this mean for rents?
The rental for the new builds is highly dependent on the total cost.
Existing Units – current rents range from $139 per week to $176 per week.
Existing rents will need to increase at 6% per annum to recover projected costs, including $400K of improvements each year. This results in existing rentals ranging from $197 to $250 per week in 6 years’ time (projected for the 2029/30 year).
New Units - these are expected to be a few years away with the first units budgeted for 5 years’ time. The projected rental based on a build cost of $160K per unit is $310 per week in 2028. If the build cost if 50% higher then the initial rental cost is estimated to be $330 per week for the new units. This is projected to increase at 6% p.a. thereafter.
Should Council subsidise rents from rates or change the Tenant Priority Policy?
As a general principle, should Council subsidise rents from rates? This would make Community Housing rentals more affordable or could enable more units to be built. Should Council look to prioritise low income tenants through some form of means testing? These are changes from our current policies and would require further work to look at the level of subsidy or what criteria would be used for priority tenants.
