The Tararua District has had a large increase in residents aged 65 years and over, putting added pressure on the pensioner housing council provides.
Currently there are more than 50 people on the waiting list, including those who do not meet the criteria.
Demand for council flats reflects the very tight rental market across the Tararua District and at the time of a report to council, there was one, one-bed flat available at Norsewood at $140 a week and one, two-bed flat in Dannevirke at $230. There were only five residential properties for rent in the district.
"The increased demand has been significant since 2015 and shows no sign of reducing," Malcolm Thomas, council's strategy and policy adviser, has told councillors.
"We need more pensioner flats," councillor Shirley Hull said.
"We have our own housing shortage in Tararua and I've seen people move into garages temporarily."
But, while Hull agreed council's pensioner housing needs to be self-funded, she's concerned that along with the upcoming $6 a week increase, the move from basing rents on 25 per cent of gross weekly superannuation to 30 per cent could impact on renters.
Thomas said the 30 per cent ratio equates to approximately a full market rent. However, he said, this was not a target, rather a policy limit.
"Council policy has always been that this activity would be self-funding, with the annual costs covered by rent, with no rates input.
"But in reality for many years, the rental income has not been sufficient to cover the true long-term costs," he told district councillors last week.
District mayor Tracey Collis said she was "quite comfortable" with the 30 per cent level.
"I don't want staff turned into auditors, but we need to be fair and transparent.
"There is a real value in council-owned pensioner housing."
Deputy mayor Allan Benbow said council needed to be careful and "think this through."
Council's chief executive, Blair King, conceded it was "very emotive when you change rents."
"[But] If you go back a year ago, we installed heat pumps and insulated our flats, at the time it was nice to do, but not mandatory."
However, even with a series of substantial rent increases over the past three years, council is not keeping up with rental market increases, Thomas said.
Council charges $156 a week for two-bedroom flats and $63 a week for those still remaining in tenancy contribution agreements. Dannevirke one-bed units are charged at $105 a week, $102 in Pahiatua and Woodville and $98 in Eketahuna.
Council staff have asked a local rental agency for advice on market rents, with a market rental of approximately $130 a week for Dannevirke one-bed units expected.
With additional services such as ground maintenance, rubbish and support services built into the council rents, tenants receive a higher level of service than the normal market rentals.
Rents are planned to increased by another $6 a week on July 1, but council tenants can apply to Work and Income for assistance with their housing costs, if they meet the criteria.
Up until recently the rental levels charged by council have been below the lower threshold, meaning no subsidy has been available.
However, tenants with a community services card and assets of less than $8100 will be able to receive some Government rental subsidy as further rent increases occur above the threshold. Council can provide assistance with accommodation supplement applications.