Tenants at units in South Dunedin noted the irony of an expected rise in their pensions they said would be nullified by the rent increase.
The rent increase was the result of a rise in contractors' prices, and the need for depreciation that would be used to build new units, Dunedin City Council finance and corporate support general manager said.
The rent increases for the council's almost 1000 housing units were first indicated in the draft budget for the 2008-09 financial year in January.
A 16% increase in rent for a council bedsit would make it $84 a week (up $12), and for a two-bedroom unit $157 (up $22), with no change in the level of service.
The council's objective for its rental housing was to provide affordable accommodation for the elderly, and fixed- or low-income earners.
Council policy requires it to be provided at no cost to the ratepayer, which means the cost of the service must be paid from income from rents.
One tenant, who asked not to be identified, contacted the Otago Daily Times after receiving a letter from the council that said the increase would begin in August.
He said the rent for his bedsit had increased by $2 a year for the past few years, then by $10 last year, and $12 this year.
As he paid fortnightly, that meant paying an extra $24 each time he paid his rent, an extra cost he said he could not afford from his pension.
"I'll just have to wait till it happens," he said.
"I'll have to rob Peter to pay Paul."
Other tenants spoken to yesterday in South Dunedin were not keen to give their names.
Most lived on pensions, and a man who lived alone in a one-bedroom unit said he just had to accept the increase: "That's all there is to do.
''You have to cut back on everything now, it doesn't make much difference."
Others said they could cope with the extra rent, but worried about people in a worse situation than them, such as those with health problems.
"A lot of people will be affected," one woman said.
"You can't do much about it - just buy less," she said.
A woman at housing units in Victoria Rd lamented the effect of the rent rises on a pension increase expected later this year.
"The Government gives us a rise in the pension, then the council comes in and gives us a rent rise."
Mr Stephens said the rent increases were caused both by a rise in the cost of servicing units and the need to build new, better accommodation.
The future of council housing was being considered by a council working party, which would discuss whether the city should keep building and owning units, and how council housing fitted with state housing.
Mr Stephens said contractors' prices for work including internal and ground maintenance, plumbing, electrical work and lawnmowing had increased, and the rent increase was also funding depreciation, necessary to build new units.
Most of the properties had been built in the 1940s and 1950s using cheap government loans, and while the design was appropriate at that time, it no longer was.
New units being built were warmer and more energy efficient.
The council's budget will be approved on June 16.
