Housing to leave hole of $78b
The Christchurch City Council will have a $78 billion shortfall by the end of the century if it sticks with its social housing model, consultants say.
Consultants PwC have predicted the massive shortfall if the council continues to charge below market rents and only implements moderate annual rent increase on its social housing portfolio.
"We have to do something that gets us out of our hole," said Cr Paul Lonsdale yesterday, as a seven-member hearings panel met to consider public submissions on the proposed restructuring.
The council is the country's second-biggest landlord with more than 2600 social housing units but it has been struggling to generate enough money from the rents it charges - half the market rate - to maintain and upgrade them.
Just over half the council's housing units are at their mid-life renewal phase but there are no funds to upgrade. The social housing portfolio was designed to be self-funding so no rates money has been spent on it.
The panel is keen for the council to set up a not-for-profit entity to manage some of its social housing and drive the provision of at least an extra 1000 housing units in the city.
It has asked staff to do more work around how the entity, in which it is proposed the council would have a 49 per cent stake, could be structured and run but potentially up to $50 million worth of council-owned land and housing could be leased to it.
The entity would be set up to be eligible for registration as a community housing provider, meaning it could access the income-related rent subsidies offered by the Government.
It could charge market rents without putting an undue burden on tenants, as how much they paid would be determined by how much they earned. Any difference between that figure and the market rent would be topped up by the Government.
The extra revenue could then be used to maintain and improve the social housing stock.
Cr Ali Jones said she was worried if the council leased land to the new company it would rule out the option of selling that land to reduce its projected $900 million funding shortfall.